3. Three individuals form Skylark Corporation with the following contributions: Cliff, cash of $50,000 for 50 shares; Brad, land worth $20,000 (basis of $11,000) for 20 shares; and Ron, cattle worth $9,000 (basis of $6,000) for 9 shares and services worth $21,000 for 21 shares.

	a.	These transfers are fully taxable and not subject to 351.
	b.	Rons basis in his stock is $27,000.
	c.	Rons basis in his stock is $6,000.
	d.	Brads basis in his stock is $20,000.

4. Rose Corporation (a calendar year taxpayer) has taxable income of $300,000, and its financial records reflect the following for the year.

Federal income taxes paid	$110,000
Net operating loss carryforward deducted currently	70,000
Gain recognized this year on an installment sale from a prior year	44,000
Depreciation deducted on tax return (ADS depreciation would have been $10,000)	40,000
Interest income on Iowa state bonds	8,000

Rose Corporations current E & P is:

	a.	$254,000.
	b.	$214,000.
	c.	$194,000.
	d.	$104,000.