Sam owns a farm. Concerned about liability those darn lawyers who represent folks who got sick from eating a bad vegetable grown on Sams farm! In the current year, Sam incorporates his business by forming Farm Corporation (FARM). In exchange for (a) all of FARMS stock (FMV $900,000) and (b) FARMs note payable of $300,000, FARM receives Sams wonderful farm (basis of $200,000 and fair market value of $1.2 million).

1a	Does Sam realize any gain on the incorporation? _____ If so, how much? ____ Explain.
1b	Does Sam recognize any gain on the incorporation? _____ If so, how much? ____ Explain.
1c.	What basis does Sam have in the FARM stock? ____________ Explain. What basis does Farm Corporation have in the business assets the farm - it receives from Sam? ___________