Problem 2-2

o On February 1 of year 1, Richard, Mike, Patrick, and Sean form Brothers Corp and transfer the following items:

	Property Transferred
Transferor	Asset	Basis to Transferor	FMV	Number of Common Shares Issued
Richard	Land	27000	40000	600
	Building	28000	80000
	Mortgage on Land and
	Building	70000	70000
Mike	Machines	25000	40000	400
Patrick	Truck	15000	5000	50
Sean	Legal Services	0	15000	150

Richard purchased the building and land several years ago, $40,000 for the building, and $22,000 for the land. Depreciation has been claimed using the straight line method.

In addition to the machines, Mike received a note from Brothers corp. due in 3 years for $10,000 at the market interest rate. Mike originally purchased the machines 3 years ago for $50,000.

In addition to the truck, Patrick received a cash payment of $10,000. Patrick