69) On May 1 of the current year, Kiara, Victor, Pam, and Joe form Newco Corporation with

the following investments:

Property Transferred

Number of

Transferor

Asset

Basis to Transferor

FMV

shares issued

Kiara

Land

$12,000

$30,000

Building

38,000

70,000

Mortgage and the

land & building

60,000

60,000

Victor

Equipment

25,000

40,000

Pam

Van

15,000

10,000

Joe

Accounting Services

0

10,000

Kiara purchased the land and building several years ago for $12,000 and $50,000,

respectively. Kiara has claimed straight-line depreciation on the building. Victor also

received a Newco Corporation note for $10,000 due in three years. The note bears interest

at a rate acceptable to the IRS. Victor purchased the equipment three years ago for

$50,000. Pam also receives $5,000 cash. Pam purchased the van two years ago for $20,000.

a)

Does the transaction satisfy the requirements of Sec. 351?

b)

What are the amounts and character of the reorganized gains or losses to Kiara, Victor,

Pam, Joe, and Newco Corporation?

c)

What is each shareholder's basis for his or her Newco stock? When does the holding

period for the stock begin?

d)

What is Newco Corporation's basis for its property and services? When does its holding

period begin for each property?