- B and J , want to form a corporation to conduct a consulting business. They will be the only owners. Unfortunately, neither of them has cash or property to contribute to the corporation other than the following:

B: One share of Nike stock. Tax basis $30 and fmv $100

J: One share of Disney stock. Tax basis $10 and fmv $100

B and J each have owned their respective stock in Nike and Disney for three years. B and J dont want to sell the stock and then contribute the cash proceeds to the corporation. Rather, they propose to contribute the stock to the corporation as a capital contribution in exchange for shares of stock in the newly formed corporation. What are the tax consequences if they pursue this approach?

- C corporation is a cash method, calendar year corporation. R, an individual, is C corporations sole shareholder. On December 31, C corporation has a $225 current earnings and profits balance and a $50 accumulated earnings and profits balance. During the year C corporation made equal quarterly cash distributions of $100 each to R. R has a stock basis of $70 in his C corporation stock. What are the tax consequences to R of each distribution?

-C corporation distributes land to its only shareholder, individual R, in a non-liquidating distribution. The land has a tax basis of $130 to the corporation and its fmv is $150. The corporation has $500 in current earnings and profits and $200 in accumulated earnings and profits. What is the gain or loss recognized by C corporation on the distribution? What are the tax consequences to R?

- Suppose instead that the land had a fair market value of $100 instead of $150 (and its basis is still $130) at the time of the distribution. What is the gain or loss recognized by C corporation on the distribution? What are the tax consequences to R?