*PLEASE ANSWER VARIATION 2*

Martha and Tom form the MT Corporation, with a transfer of the following properties:

Martha $1,200,000 cash

Tom $800,000 FMV property

$300,000 tax basis

Martha will receive 60% and Tom 40% of the corporate stock.

Complete the following

Martha Tom

Realized gain _______ ________

Recognized gain _______ _______

Basis of Stock _______ _______

MT basis in contributed asset _______ _______

VARIATION 1: return to original facts (no Karla). Toms property is valued at $1,100,000 but is contributed subject to a $300,000 liability.

Complete the following

Martha Tom

Realized gain ________ ________

Recognized gain ________ _________

Basis of stock _________ _________

MT basis in contributed asset __________ _________

VARIATION 2: Same as Variation 1 except Toms property is valued at $1,200,000 and is contributed subject to a liability of $400,000.

Complete the following

Martha Tom

Realized gain ________ ________

Recognized gain ________ _________

Basis of stock _________ _________

MT basis in contributed asset __________ _________