On August 1, 2012, four unrelated individuals created West Coast Production, Inc. to produce South Pacific styled furniture.William Sauter transferred two pieces of equipment, a lathe with a fair market value (adjusted basis) of $42,520 ($32,450) and a table saw with a fair market value (adjusted basis) of $37,480 ($33,500) for 320 shares of stock.James Wilson, a cash basis taxpayer, transferred receivables with a FMV of $30,000, land with a FMV (adjusted basis) of $40,000 ($37,500) and $75,000 of cash for 580 shares of stock.The receivables were collected in 2012. The land will be held as an investment.Walter Jones transferred a building with an adjusted basis of $108,000 subject to a mortgage of $124,000 into the business for 420 shares of stock.Mr. Jones rented the land on which the building was located to the corporation for $11,250 per month. Finally, Jojo Latime contributed a truck with a fair market value (adjusted basis) of $37,500 ($42,400) for 115 shares of stock and cash.Cash McCoy, an attorney, was given 248 shares of stock for legal services in creating the company, including $9,500 for registering and issuing the stock.The company elected to adjust stock basis for unrecognized losses.Mr. McCoy sold his shares to Mr. Sauter on April 6, 2013 for $235 per share.

On September 1, 2017, as part of an expansion, the company purchased a sander for $52,000.On December 31, 2017, Sauter, Wilson and Jones transferred from a cash basis joint venture into the company receivables with a FMV of $37,800 and a new undepreciated saw with a fair market value (adjusted basis) of $52,200 ($51,000).Each man received 150 shares of stock. $32,400 of the receivables was collected in 2018 with the remainder written off that year (the only bad debts in 2018).

A) Provide the tax basis in each person's stock and detail the gain or loss realized and recognized by each person on their contributions to the company on August 1, 2012.

B) Calculate the amount and character of the gain recognized by McCoy on the sale of his stock on April 6, 2013.

Use below to calculate the Fair Market Values, Adjusted Basis, any gains realized and recognized and Asset basis and stock basis.

Each stock is worth $250 per share. Please see below.

Name FMV received Adjusted basis Gain Realized Gain Recognized Asset Basis Stock basis

William $80,000

James

Walter - Building

Mortgage

Stock

Sold 105,000 stock +

124,000 mortgage debt

JoJo

8750 cash received

FMV

b) Land

Sales price

cost

Loss

ACCTS Receivable

Saw

Stock basis