Johanne transferred investment property to S&J Corporation in exchange for 60 percent of the S&J Corporation stock (60 shares valued at $115,000). The property's fair market value was $190,000 and its adjusted basis to Johanne was $60,000. The investment property was subject to a $75,000 mortgage that S&J Corporation assumed on the transfer (not treated as boot).
a. Assuming the transfer qualifies under §351, what is the amount and character of the gain Johanne must recognize on the exchange?
b. What is Johanne's adjusted basis in the S&J stock he received in the exchange?
c. Assume that in addition to the investment property, Johanne transferred inventory with a fair market value of $30,000 and an adjusted basis of $20,000 for additional S&J Corporation stock. What is the amount and character of gain Johanne must recognize on the exchange of the land and inventory for stock?
d. Assuming the facts in (c), what is Johanne's basis in the S&J stock he received in the exchange?
e. Assume the original facts except that the liability assumed by S&J Corporation would give rise to a deduction when paid. What is the amount and character of gain Johanne must recognize on the exchange?
f. Assuming the facts in (e), what is Johanne's basis in the S&J stock he received in the exchange?