1.Rick transferred the following asset and liability to Warbler Corporation:

Fair Market

Adjusted

Value

Basis

Building

$330,000

$270,000

Mortgage (held for four years) on building

30,000

30,000

In return Rick received $50,000 in cash plus 90% of Warbler Corporation's only class of stock outstanding (fair market value of $250,000).

a.Does this exchange qualify for 351 treatment? (10 points)__________________

Why? (Be specific; use complete sentences, good grammar & spelling)

b.What is Rick's realized gain/loss on the exchange?

____(Gain / Loss)

c.What is Rick's recognized gain/loss on the exchange?__________________

(Gain / Loss)

d.What is Rick's basis in Warbler's stock?__________________

What is Warbler's basis in the building?