Problem 6) Archie and Reggie agree to go into business together selling collectibles. According to the agreement, Archie will contribute inventory valued at $250,000 in return for 70 percent of the stock in the corporation. Archie's tax basis in the inventory is $100,000. Reggie will receive 30 percent of the stock in return for providing accounting services to the corporation (these qualify as organizational expenditures). The accounting services are valued at $60,000.

Please answer the following questions about the tax consequences of the transaction to Reggie.

a. What amount of income, gain or loss does Reggie realize on the formation of the corporation?

c. What is Reggie's tax basis in the stock he receives in return for his contribution of services to the corporation?

b. What amount of gain or loss, if any, does he recognize?