Apple was interested in expanding his business and joined his 3 friends (red, black, green). The new corporation (blue, INC) was incorporated last year.

• Apple contribute his property( FMV 106000, tax basis 150000) and received 150 shares of blue, INC.
• Red contributed a building ( FMV 250000, adjusted tax basis 300000in return for 200 shares of blue, Inc and 50000 cash.
• Black contributed land (FMV 300000, tax basis of 245000) in exchange for 250 shares of blue, INC. and contributed was subject to a $50,000 liability which BLUE assumed.
• Green contributed service of 45000 for 50 shares.

The total shares of stock issued and outstanding of blue, INC is 700 shares. The transfers qualify under 351

Q: About Red

• How much gain or loss realize on the transfer of the assets to the corporation?
• How much, if any, gain or loss does RED recognize?
• What tax basis does RED have in the corporations stock?
• What is the corporations tax basis in RED it receives from BLUE INC?

I am not sure my work is right? please help me to check it.

ANSWER 1:?

ANSWER 2:according to 351 transactions, because he receives a boot of 50,000 and booting can only result in gain recognition, he can not trigger recognition of loss.

ANSWER 3 and 4

Ron ( land) FMV adjusted tax basis loss 250,000.00 300,000.00 (50,000.00) shareholder's basis of stock received in exnchange for property adjusted basis of property transferred 300,000.00 +gain recognized -boot received (including any liabilites transferred) 50,000.00 -adjustment for loss property (if elected) 0 =basis of stock received 250,000.00 300,000.00 corporation's basis in property received adjusted basis of property transferred +gain recognized by transferor-shareholder -adjustment for loss property (if elected) =basis of property to corporation 0 300,000.00