In the current year,

MattMatt,

JonaJona,

and

FionaFiona

form

AresAres

Corporation.

MattMatt

contributes land (a capital asset) having a

$ 25 comma 000$25,000

FMV (fair market value) in exchange for

145145

shares of

AresAres

stock. He purchased the land three years ago for

$ 140 comma 000$140,000.

JonaJona

contributes machinery (Sec. 1231 property purchased four years ago) having a

$ 85 comma 000$85,000

adjusted basis and a

$ 15 comma 000$15,000

FMV in exchange for

105105

shares of

AresAres

stock.

FionaFiona

contributes services worth

$ 10 comma 000$10,000

in exchange for

4040

shares of

AresAres

stock.

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Part 1

Requirement a. What is the amount of

MattMatt's

recognized gain or loss?

Matt realizes a

and recognizes

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Requirements

a.	What is the amount of MattMatt's recognized gain or loss?
b.	What is MattMatt's basis in his AresAres shares? When does his holding period begin?
c.	What is the amount of JonaJona's recognized gain or loss?
d.	What is JonaJona's basis in his AresAres shares? When does his holding period begin?
e.	How much income, if any, does FionaFiona recognize?
f.	What is FionaFiona's basis in her AresAres shares? When does her holding period begin?
g.	What is AresAres's basis in the land and the machinery? When does its holding period begin? How does AresAres treat the amount paid to FionaFiona for her services?

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