Elaine, James, and Jeremy form Forest Corporation by transferring the following items to the corporation:

Items transferred

Basis Fair Market Value Number of Shares Issued

From Elaine:

Cash $60,000 $60,000 200 shares

Equipment 30,000 340,000

From James:

Land 100,000 540,000 200 shares

Mortgage 140,000 140,000

From Jeremy:

Office equipment 50,000 260,000* 100 shares

Besides the receiving 100 shares of stock, Jeremy also received $60,000 of cash. Forest Corporation assumed the mortgage transferred by James.

1. Determine the amount of income, gain or loss (if any) that Elaine has from this transaction.

2. What is Elaines basis in her Forest Corporation stock?

3. Determine the amount of income, gain or loss (if any) that James has from this transaction.

4. What is James basis in his Forest Corporation stock?

5. Determine the amount of income, gain, or loss (if any) that Jeremy has from this transaction.

6. What is Jeremys basis in his Forest Corporation stock?

7.

What basis does Forest Corporation has in:

• Equipment
• Land
• Office equipment