Please see attached document. Questions deal with corporate formation.

\fFred and James plan to organize a corporation to operate a college textbook store, which will be called College Book Store, Inc. (CBS). They will each engage in the exchanges described below. What are the tax consequences to Fred, James and CBS that result from the formation of the corporation? Specifically, how much, if any, gain/loss must each realize and recognize? What is the basis to each shareholder in the stock received? And, what is the corporation's basis in the assets received by it? a. Fred will contribute 10,000 text books, previously held for sale to customers in the ordinary course of business, with a basis of $300,000 and a fair value of $450,000, in exchange for 10 shares of common stock, worth $250,000. In addition, CBS will assume $200,000 of Fred's debts that are secured by the textbooks. (10 points) b. James will contribute land previously held as an investment on which CBS will build a store. The land has a basis of $260,000 and a fair value of $350,000. James will receive 10 shares of common stock and the corporation will assume a $100,000 debt James owed to the First National Bank of Anytown. Assume the debt was incurred four years ago to pay James' gambling debts and is unsecured. (15 points) c. Same as part b above, EXCEPT: assume that James' debt to the bank is a mortgage on the land he is contributing in the exchange. (15 points) 2. Determine the amount of the dividend received by the shareholders of Bonnie's Bakery & Bar, Inc. (BBB) and the consequences of any distributions that are not dividends in each of the following situations. (15 points each) a. Bonnie owns all of the stock of BBB. Her basis in the stock is $24,000. In its first year of existence, BBB earned $30,000 of current earnings and profits. One half of this sum was earned in the period January to June, and the other half was earned from July through December. On July 1, BBB borrowed $50,000 from Third Bank and distributed $40,000 to Bonnie. b. Assume that in its first year of business, BBB had negative $20,000 of current earnings & profits. In its second year of existence, BBB earned $24,000 of current earnings and profits and distributed $15,000 to Bonnie. c. Assume that after several years of operation, BBB had $36,000 of accumulated earnings and profits. During the current year, BBB earned $24,000 of current earnings and profits. On April 1, BBB distributed $40,000 to Bonnie. On July 1, Bonnie sold half of her BBB stock to Misty for $50,000. On December 31, BBB distributed $20,000 each to Bonnie and Misty. d. Ignoring part c above, assume that after several years of operation, BBB had $36,000 of accumulated earnings and profits. During the current year, BBB had negative $32,000 in current earnings and profits from ordinary business operations. On April 1, BBB distributed $40,000 to Bonnie. On July 1, Bonnie sold half of her BBB stock to Misty for $50,000. On December 31, BBB distributed $20,000 each to Bonnie and Misty. What are the consequences to Bonnie and Misty? What are BBB's accumulated earnings and profits at the beginning of the next year