1. During the current year, Mary and Cora form Downton Corporation and transfer the following property, each of which has been held long-term:

Transferor	Asset	Transferor's Adjusted Basis	Fair Market Value	Consideration Received
Mary	Cash	$8,000	$8,000	200 shares of Downton stock
Cora	Undeveloped Land	$21,000	$27,000	800 shares of Downton stock and $4,000 cash
	Inventory	$12,000	$9,000

Instructions:

1. Does the exchange qualify as an IRC Sec. 351 non-recognition transaction?
2. What are the following tax consequences of the property transfers outlined above for the shareholders, Mary and Cora? What is Mary and Cora's Gain/loss recognized (amount and character), Basis in Downton stock received. and Holding period in Downton stock received.
3. What are the following tax consequences of the property transfers outlined above for Downton Corporation? What is Downtown Corporations gain/loss recognized, basis in land received, basis in inventory received, holding period in land received, and holding period in inventory received?