1. 2011 Edward, Fan, and George form Jet Corporation. Ed contributes land having a $35,,000 FMV purchased as an investment in 2007 for $15,000 in exchange for 35 shares of jet stock. Fran contributes machinery (sec 1231 property) purchased in 2007 and used in her business in exchange for 35 shares of jet stock Immediately before the exchange, the machinery had a $45,000 adjusted basis and a $35,000 fmv, George contributes services worth $30,000 in exchange for 30 shares of jet stock. a) What is the amount of Ed recognized gain or loss? b) What is Eds basis in his jet shares? When does his holding period begin? c) What is amount of Fran s recognized gain or loss? d) What is Frans basis in her jet shares? When does her holding period begin? e) How much income, if any, does George recognize? f) What is Georgs basis in his jet shares? When does his holding period begin? g) What is Jets basis in the land and the machinery? When does its holding period begin? h) How does Jet treat the amount paid to George for his services? i) Hoe would your answers to Parts a through g change if George instead contributed $5,000 in cash and services worth $25,000 for his 30 shares of Jet stock? 2. Sec. 351 requirements. Al, bob, and Carl form West Corporation and transfer the following items to West: Transferor Shares Received Transferor Item Basis FMV by Transferor Al Patent -0- $25,000 1,000 Common Bob Cash $25,000 25,000 250 preferred Carl Services -0- 7,500 300 common The common stock has voting rights. The preferred stock does not. a) Is the exchange nontaxable under Sec. 351? Explain the tax consequences of the exchange to Al, Bob, Carl, and West. b) How would your answer to part a change if Bob instead had received 200 shares of common stock and 200 shares of preferred stock? c) How would your answer to part a change if Carl instead had contributed $800 cash as well as services worth $6,700? 3. Transfer of Business Properties. Jerry transfers property having a $32,000 adjusted basis and a $50,000 FMV to Emerald Corporation in exchange for all of Emeralds stock worth $15,000 and Emeralds assumption of a $35,000 mortgage on the property 4. A) What is the amount of Jerry s recognized gain or loss? 5. b) What is Jerry basis in the Emerald stock? 6. c) What is Emeralds basis in the property? 3.7. d) How would your answer to parts a through c change if the mortgage assumed by Emerald were $15,000and the Emerald stock were worth $35,000