Dave and Buster each own a successful restaurant. They decide to combine their restaurants into a new C corporation called Dave and Busters. Dave and Buster will each receieve 50% of Dave and Busters stock. Dave is contributing property to Dave and Busters with a fair market value of $1,000,000. He is also tansferring liabilities of $200,000. His tax basis in the property transferred is $375,000. In return, Dave is receiving stock with a fair market value of $800,000.

1. How much gain or loss does Dave realize in this exchange?

2. How much gain or loss does Dave recognize on this exchange?

3. What is Daves tax basis iin his newly receieved Dave and Busters stock?