Jackson owns 80% of Emerald Corporation stock. He transfers a business automobile to Emerald in exchange for additional Emerald stock worth $ 8,000 and Emerald's assumption of both his $3,000 automobile debt and his $ 4, 000 education loan. The automobile originally cost Jackson $ 19, 000 and, on the transfer date, has a $ 7,500 adjusted basis and a $ 15, 000 FMV.

Requirements

a. What are the amount and character of Jackson's recognized gain or loss?

b. What is Jackson's basis in his additional Emerald shares?

c. When does Jackson's holding period for the additional shares begin?

d. What basis does Emerald take in the automobile?