Robert, Kim, Tony, and Sharon decided to form the Cash Cow Corporation. In exchange for 40 percent of the stock, Robert contributed an apartment building with a fair market value of $700,000 and subject to a liability of $300,000. Robert’s basis in the apartment building is $225,000. Kim contributed warehouse storage units worth $450,000 in exchange for 40 percent of the stock plus $50,000 in cash from the corporation. Her basis in the warehouse is $125,000. Tony contributed $100,000 cash for 10 percent of the stock. Sharon is performing services worth $100,000 for 10 percent of the stock.

a. What is the recognized gain or recognized income for:

1. Robert

2. Kim

3. Tony

4. Sharon

b. What is the basis in the stock for:

1. Robert

2. Kim

3. Tony

4. Sharon

c. What is the corporation’s basis in:

1. The apartment building

2. The warehouse