3.0 Determine the tax consequences for the formation of a C Corporation by the following persons. Assume that value given is equal to value received.

Transferor	AB	FMV	Debt Relief	Depreciation	# of shares received	Cash received
From G
Notes Receivable	100,000	100,000
Machine Tools	60,000	30,000
Truck	100,000	270,000	300,000		250	30,000
Depreciation Recapture on Truck				70,000
From H
Accounts Rec.	0	220,000
Machinery	200,000	240,000	200,000		500	120,000
Equipment	85,000	140,000
From C
Legal Advice	?	250,000			100
Cash	65,000	65,000

a. Assuming IRC Section 351 applies, how much gain, if any, must G recognize (10)?

b. Assuming IRC Section 351 applies, what will be G's basis in the Z Corporation stock (10)?

c. Assuming IRC Section 351 applies, what will be Z Corporation's basis in the Truck and machine tools--state separately (10)?

d. Assuming IRC Section 351 applies, how much gain, if any, must H recognize (10)?

e. Assuming IRC Section 351 applies, what will be H's basis in the Z Corporation stock (10)?

f. Assuming IRC Section 351 applies, how much gain or loss must C recognize if the services

are to be rendered at a future date? Assume that C will forfeit the stocks if such services are not

performed (5)

g. Assuming IRC Section 351 applies, how will Z treat the value of C's services--state tax authority

(5)?