Question: On March 1 of the current year, Bob, Alice, Carla, & Dick form Bear Corporation and transfer the following items:
|
Property Transferred
|
|
Transferor
|
Asset
|
Basis to Transferor
|
FMV
|
Number Common Shares Issued
|
|
Alice
|
Land
|
$12,000
|
$30,000
|
|
|
|
Building
|
38,000
|
70,000
|
400
|
|
|
Mortgage on the land and building
|
60,000
|
60,000
|
|
|
Bob
|
Equipment
|
25,000
|
40,000
|
300
|
|
Carla
|
Van
|
15,000
|
10,000
|
50
|
|
Dick
|
Accounting services
|
-0-
|
10,000
|
100
|
Alice buy the land and building several years ago for $12,000 and $50,000, respectively. Alice has claimed straight-line depreciation on the building. Bob also receives a Bear note for USD 10,000 due in three years. The note bears interest at the prevailing market rate. Bob purchased the equipment three years ago for USD 50,000. Carla also receives $5,000 cash. Carla purchased the van two years ago for USD 20,000.
[A] Does the transaction satisfy the requirements of Sec. 351?
[B] Determine the amount and character of the gains or losses recognized by Alice, Bob, Carla, Dick, and Bear?
[C] Determine each shareholder's basis in his or her Bear stock? When does the holding period for the stock begin?
[D] What is Bear's basis in its property and services? When does the holding period for each property begin?