Dylan, Devon, and Ricken form Lemon Corporation in the current year. Dylan contributes $50,000 cash in exchange for 50 shares of Lemon. Devon contributes land with a market value of $50,000 (basis of $15,000) in exchange for 40 shares and $10,000 cash. Ricken provides services to Lemon valued at $10,000 in exchange for 10 shares.

Question Content Area

a. Determine the realized gain or loss on the exchange for each shareholder.

b. Determine the recognized gain or loss (or income) on the exchange for each shareholder.

c. Determine the basis of each shareholders stock. d. Determine Lemons basis in the land.