Barry and Irv form Swift Corporation. Barry transfers cash of $100,000 and equipment (basis of $300,000 and fair market value of $400,000)for 50% of Swift's stock. Irv transfers land and building (basis of $510,000 and fair market value of $450,000)and agrees to manage the business for one year for the other 50% of Swift's stock. The value of Irv's services for one year is $50,000.
a.What is Barry's recognized gain? Basis in the Swift Corporation stock?
b.What are the tax consequences to Irv?
c.What are the tax consequences to Swift Corporation?

Question

Quizplus · Accepted Answer

The Answer of Barry and Irv form Swift Corporation. Barry transfers cash of $100,000 and equipment (basis of $300,000 and fair market value of $400,000)for 50% of Swift's stock. Irv transfers land and building (basis of $510,000 and fair market value of $450,000)and agrees to manage the business for one year for the other 50% of Swift's stock. The value of Irv's services for one year is $50,000.
a.What is Barry's recognized gain? Basis in the Swift Corporation stock?
b.What are the tax consequences to Irv?
c.What are the tax consequences to Swift Corporation?

Barry and Irv Form Swift Corporation