1_Elwood Emerson transferred a building having a fair market value of $200,000and an adjusted basis of $1215,000to his controlled corporation. In return Elwood received common stock worth $80,000, a 10-yeardebentureworth$20,000,a two-yearnote worth $10,000, $5,000 cash and the corporation assumed the mortgage of $85,000 on the building.

a. How much gain is realized by Elwood?

b. How much (and what type) gain is recognized by Elwood?

c. What is the corporation's basis for the building?

d. What is Elwood's basis for the note, debenture, and stock received.

2_Norman Nagertransfers assets to a corporation that is wholly owned byhim. In exchange for the assets, Norman receivedshort-term notes with afair market value of $64,000 and stock with a fair market value of $136,000. The assets transferred to the corporation are as follows:

Asset Adjusted Basis at Transfer Depreciation Recapture Potential Fair Market Value at Transfer Land (Sec. 1231 asset) $50,000 $0 $25,000 Building (Sec. 1231 asset) 50,000 15,000 75,000 Machinery 30,000 25,000 25,000 Inventory 70,000 9 75,000 $200,000 $40,000 $200,000

a. How much (and what type) gain will Norman recognize on the transfer?

b. What is Norman's basis int eh corporatestock and short0term notes received?

c. What is the corporation's basis in each asset it receives?