Patel and Pierce form PP Corporation by making the following transfers: Adjusted Basis Fair Market Value From Patel, Cash $360,000 $360,000 -O- Patent 40,000 From Pierce- Equipment (depreciation claimed $100,000) 240,000 370,000 Both Patel and Pierce receive stock in PP Corporation equal to the value of their investments. o Neither Patel nor Pierce recognize income. O Patel must recognize income of $40,000. O Pierce must recognize income of $130,000 and Patel has no income. O Pierce must recognize income of $100,000 and Patel has no income