Mary and Todd form the MT Corporation, with a transfer of the following properties:

Mary $500,000 cash

Todd $500,000 FMV property

$300,000 tax basis

Both Mary and Todd receive a 50% interest in the corporate stock.

Complete the following blanks:

Mary Todd

Realized gain ________ ________

Recognized gain ________ _________

Basis of stock _________ _________

MT basis in contributed asset _________ _________

VARIATION 1: In addition to Mary and Todd, Karla joins the corporation at its inception. Karla will provide services to the corporation in exchange for a 25% interest in the stock. That is, she receives 25% of the outstanding shares. Does anything change? Why or why not?

VARIATION 2: return to original facts (no Karla). Todds property is valued at $700,000 but is contributed subject to a $200,000 liability.

Complete the following blanks

Mary Todd

Realized gain ________ ________

Recognized gain ________ _________

Basis of stock _________ _________

MT basis in contributed asset _________ _________