Lois, who is single, transfers property with an $80,000 basis and a $120,000 FMV to Water Corporation

Question:

Lois, who is single, transfers property with an $80,000 basis and a $120,000 FMV to Water in exchange for all 100 shares of Water stock. The shares qualify as Sec. 1244 stock. Two years later, Lois sells the shares for $28,000.
a. What are the amount and character of Lois’s recognized gain or loss?
b. How would your answer to Part a change if the FMV of the property were $70,000?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...