M$8$: Ch$.10$ & $11$ Homework $[2$ hours$]$

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Problem $11-19$

Corporate Formation $($LO $11\mathrm{.}7)$

Dylan, Devon, and Ricken form Lemon Corporation in the current year. Dylan contributes $$50,000$ cash in exchange for $50$ shares of Lemon. Devon contributes land with a market value of $$50,000($basis of $$15,000)$ in exchange for $40$ shares and $$10,000$ cash. Ricken provides services to Lemon valued at $$10,000$ in exchange for $10$ shares.

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a$.$ Determine the realized gain or loss on the exchange for each shareholder.

Dylan: fill in the blank $1$ of $1$$

Devon: fill in the blank $1$ of $1$$

Ricken: fill in the blank $1$ of $1$$

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b$.$ Determine the recognized gain or loss $($or income$)$ on the exchange for each shareholder.

First, does this exchange meet the exchange requirements? fill in the blank $1$ of $4$

Dylan: fill in the blank $1$ of $1$$

Devon: fill in the blank $1$ of $1$$

Ricken: fill in the blank $1$ of $1$$

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c$.$ Determine the basis of each shareholder's stock.

Dylan: fill in the blank $1$ of $1$$

Devon: fill in the blank $1$ of $1$$

Ricken: fill in the blank $1$ of $1$$

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d$.$ Determine Lemon's basis in the land.

fill in the blank $1$ of $1$$