Question

Ann and Bob form Robin Corporation. Ann transfers property worth $420,000 (basis of $150,000) for 7 share in Robin Corporation. Bob receives 30 shares for property worth $ 165,000 (basis of $30,000) and for legal services (worth $ 15,000) in organizing the corporation.1. What gain or income, if any, will the parties recognize on the transfer?Ann recognizes (ordinary income or gain) of ______. Bob recognizes (ordinary income or gain) of ______.2. What basis do Ann and Bob have in the stock in Robin Coportation?
Ann has a basis of ______, while Bob has a basis of ______ in the stock.3. What is Robin Corportaion's basis in the property and services it received form Ann and Bob?Robin Corportaion has a basis of ______ in the property Ann transferred and a basis of _____ in the property Bob transferred.

Answer 1

1. What gain or income, if any, will the parties recognize on the transfer?Ann recognizes (ordinary income or gain) of $0 (Ann does not recognize a gain). Bob recognizes (ordinary income or gain) of $15000( the value of the service he rendered to Robin corporation).

2. What basis do Ann and Bob have in the stock in Robin Corporation?

Ann has a basis of $150,000, while Bob has a basis of $45,000 in the stock.

3. What is Robin Corporation's basis in the property and services it received form Ann and Bob?Robin Corporation has a basis of $150,000 in the property Ann transferred and a basis of $30,000 in the property Bob transferred.