1. Jim, John, and Joe seek to form a new corporation in a transaction that qualifies under section 351. They each contribute property with a basis of $30,000 and a FMV of $100,000 in return for 100 shares of common stock. As to Jim, his property contribution is subject to a mortgage of $40,000. Jims taxable gain (if any) on this contribution is:

1. 0
2. $70,000
3. $40,000
4. $10,000
5. None of the above

1. In the previous problem, assume John and Joes contributions are mortgage free. What would be the corporate basis in Jim, John, and Joes contributions?

1. $100,000/$100,000/$100,000
2. $30,000/$30,000/$30,000
3. $40,000/$30,000/$30,000
4. $20,000/$30,000/$30,000
5. None of the above