Determine the effects of § 351 for the following taxpayers.
If an amount is zero, enter "0".
a. Grady exchanges qualified property, basis of $12,000 and fair market value of $18,000, for 60% of the stock of Eadie Corporation. The other 40% of the stock is owned by Pedro, who acquired it five years ago.
Because this transaction Select meets does not meet Item 1 the control of the corporation requirement, Grady has income of $ and $ basis in his shares of stock.
b. Trey, Amy, and Erin incorporate their businesses by forming Whitehead Corporation. As part of a prearranged plan, Trey exchanges his qualified property (basis $500; fair market value $1,000) for 100 shares in Whitehead on May 9, 2014. Amy exchanges her qualified property (basis $1,800; fair market value $2,000) for 200 shares of Whitehead Corporation stock on May 12, 2014, and Erin exchanges her qualified property (basis $2,000; fair market value $3,000) for 300 shares in Green on March 5, 2014.
Because this transaction Select meets does not meet Item 4 the control of the corporation requirement, Trey has income of $ and $ basis in his shares of stock, Amy has income of $ and $ basis in her shares of stock, and Erin has income of $ and $ basis in her shares of stock.