Gain recognizing on exchange

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Sam Rogers forms a corporation. Sam transfers to the corporation property having a basis to him of $15,000 and a fair market value of $27,000 for 900 shares of the $10 par stock of the corporation. A year later, bill Morrison, who is not related to Sam, transfers property having a basis to him of $1,000 and a fair market value of $3,000 for 100 shares of the corporate stock. The corporation issued no other stock.

a. How much gain does bill recognize on his exchange? What is the basis to Sam of his 900 shares?

b. how much gain does Bill recognize on his exchange? What is the basis to Bill of his 100 shares?

c. What gain or loss in recognized by the corporation when it issues its shares to Sam? What is the basis to the corporation of the property it received from Sam?

d. What is the gain or loss recognized by the corporation when it issues its shares to Bill? What is the basis to the corporation of the property it received from Bill?

Reference no: EM13157928

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