Question
Danny and Harry form A-1 Plumbing Corporation with the transfer of the following. Danny performs personal services for the corporation with a fair market value
Danny and Harry form A-1 Plumbing Corporation with the transfer of the following. Danny performs personal services for the corporation with a fair market value of $96,000 in exchange for 400 shares of stock. Harry contributes an installment note receivable (basis $25,000; fair market value $30,000), land (basis $50,000; fair market value $170,000), and inventory (basis $100,000; fair market value $184,000) in exchange for 1,600 shares. Determine Danny and Harry current income, gain, or loss; calculate the basis that each takes in the A-1 Plumbing Corporation stock.
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