1. Cesar owns 100 shares of stock in Ioren Wheels, Inc. He acquired the shares by gift in 2016. The gift qualified for the annual exclusion. At the time of the gift, the shares had a fair market value of $80 and an adjusted basis in the donor's hands of $40. If Ioren Wheels distributes $30 per share to each of its shareholders ($20 per share from its current and accumulated earnings and profits), what are the tax consequences for Cesar?

2. Lefty transferred property with an adjusted basis of $200,000 and a fair market value of $300,000 to a corporation in exchange for 2,000 shares of common stock in the corporation. A few days later, Righty transferred property with an adjusted basis of $65,000 and a fair market value of $45,000 to the corporation in exchange for 350 shares of common stock in the corporation. Following the transfers, the corporation had 3,000 shares of common stock outstanding. No other type of stock is outstanding. Does Lefty have to recognize any gain on the transfer? If so, how much? Can Righty recognize the loss he realized on the transfer?