ENTITY FORMATIONS

JL Company was organized on January 1 with the following contributions from its two owners:

	Property Contributed
Owner	Basis	FMV	% ownership received	Other information
Clark	$100,000	$400,000	40%
Bruce	125,000	750,000	60%	JL Co. assumes a $150,000 recourse mortgage

Assume JL is organized as a partnership.

1. Determine the following tax consequences: (Show your computations if you wish to receive partial credit for errors.)

Owner	Gain (Loss) Recognized	Basis in ownership
Clark
Bruce

2. What is JL Companys basis in the properties contributed by Clark & Bruce?

Clarks asset:

Bruces asset: