Reference no: EM132419847

Problem: Butch forms World Serious Athletics, Inc. (WSA) by transferring assets he has owned for 10 years to WSA in exchange for all of its stock in a transaction that qualifies under Section 351. WSA will be a regional athletic clothing retailer. Butch transferred the following assets:

Asset                          Basis                        Fair Market Value

Cash                         $ 50,000                                $ 50,000

Inventory                     10,000                                   50,000

Building                        25,000                                 250,000

The building is subject to a $100,000 mortgage. Since WSA will use the building in its operation, all asset transfers including the mortgage have a business purpose.

• Butch's gain or loss realized.
• Butch's gain or loss recognized.
• Butch's basis in his WSA stock.
• WSA's basis in its assets.

What is Butch's holding period for his WSA stock.