Problem 18-27 (c) (LO. 1, 3) What If #3

Janice and Thom form the Conestoga Corporation with the following consideration:

		Consideration Transferred
		Basis to Transferor		Fair Market Value		Number of Shares Issued
From Janice
	Cash	$125,000		$125,000
	Machinery	210,000		400,000		525
From Thom
	Cash	200,000		200,000
	Building	390,000		280,000
	Land	110,000		90,000		570

In the event the corporation is subject to the built-in loss adjustment, the alternative approach is not elected by the corporation and shareholder. Regarding these transactions, provide the following information:

If an amount is zero, enter "0".

a. Janice's recognized gain or loss is $_______.

b. Janice's basis in the Conestoga Corporation stock is $_______.

c. Conestoga Corporation's basis in machinery is $_______.

d. Thom's recognized gain or loss is $_______.

e. Thom's basis in the Conestoga Corporation stock is $_______.

f. Conestoga Corporation's basis in the building is $_______. Its basis in the land is $_______.

g. Would your answers to the preceding questions change if Janice received common stock and Thom received preferred stock? (Yes/No), because there (is a/is no) requirement that the transferors receive the same type of stock.

h. Would your answers change if Thom was a partnership instead of an individual? (Yes/No), because there (is a/is no) requirement that the transferors be individuals.