On January 10, 2015, Mary transfers to Green Corporation a machine purchased on March 3, 2012, for $100,000. On the transfer date, the machine has a $60,000 adjusted basis and a $110,000 FMV. Mary receives all 100 shares of Green stock, worth $100,000, and a two-year Green note worth $10,000.
a. What are the amount and character of Mary’s recognized gain or loss?
b. What is Mary’s basis in the stock and note? When does her holding period begin?
c. What are the amount and character of Green’s gain or loss?
d. What is Green’s basis in the machine? When does Green’s holding period begin?