Jimmy and Kim formed Goodman Corporation on January 2. Jimmy contributed cash of $500,000 in return for 50 percent of the corporation's stock. Kim contributed a building and land with the following fair market values and adjusted basis in return for 50 percent of the corporation's stock.

To equalize the exchange, Goodman Corporation paid Kim $100,000 cash in addition to her stock.

a. What amount of gain or loss does Kim realize on the formation of the corporation?

b. Do these transfers meet the requirements of Section 351? Why or why not (be sure to mention the two requirements of Section 351.

c. Assume that Kim has a realized loss on the formation of the corporation in part a. How much of the loss will Sasha be able to recognize?

d. Refer to part c. If Goodman was formed as an LLC instead of a corporation, how would your answer change? Why?

+ Building Land Total FMV 180,000 420,000 $600,000 Adjusted basis 150,000 500,000 $650,000 + Building Land Total FMV 180,000 420,000 $600,000 Adjusted basis 150,000 500,000 $650,000