Kacey, Brandi, Maren, Amanda, and Taylor form a new corporation (Rainbow Corp) to design, manufacture, and sell athletic clothing.

Kacey contributes equipment to be used in the business (FMV $250,000; Basis $50,000). The equipment is subject to $150,000 of business debt, which Rainbow Corp will assume. In exchange for her contributions, Kacey receives 100 shares of common stock in Rainbow Corp.

Brandi contributes inventory from her sole proprietorship business to be sold by Rainbow Corporation (FMV $125,000; Basis $75,000). The inventory is subject to $25,000 of business debt, which Rainbow Corp. will assume. In exchange for her contributions, Brandi receives 100 shares of Rainbow Corp common stock.

Maren contributes a warehouse that Rainbow Corp will use to store inventory and produce clothing (FMV $100,000; Basis $120,000) and $100,000 cash. In exchange for her contributions, Maren receives 200 shares of Rainbow Corp common stock.

Amanda contributes a large tract of land that the corporation will use to build a new store (FMV of $300,000; Basis $150,000). The land is subject to $100,000 of debt. Amanda used the proceeds of the debt to put in a new swimming pool in her backyard, along with other landscaping to her personal residence. In exchange for her contribution, Amanda receives 200 shares of Rainbow Corp common stock.

Taylor contributes machinery (FMV $350,000; Basis $275,000) to be used in the business. In exchange for her contribution, Taylor receives 200 shares of Rainbow Corp common stock; $100,000 in corporate bonds; and $50,000 in cash.

What are the tax consequences on formation to each of the shareholders (gain realized, gain recognized, stock basis)? What basis will Rainbow Corp have in each of the contributed assets? Note shares in Rainbow Corp have a value of $1,000 per share.