Ron and Susan form a corporation in 2019. Ron contributes real estate worth $200,000 in exchange for 50% of the corporation’s only class of stock. Ron’s basis in the real estate is $140,000. Susan contributes cash of $90,000 and a machine worth $110,000 for the other 50% of the corporation’s stock. The machine has a basis of $95,000 to Susan. What is the realized and recognized gain on this transfer for both Ron and Susan? What is Ron’s basis in his stock and what is Susan’s basis in her stock?

What is the corporation’s basis in the assets contributed?

How would this scenario change if instead of the machine, Susan contributed services to the corporation?