Several years ago, your client, Brooks Robinson, started an office-cleaning service. His business was very successful, owing much to his legacy as the greatest defensive third baseman in major league history and his nickname, The Human Vacuum Cleaner. Brooks operated his business as a sole proprietorship and used the cash-basis method of accounting. Brooks was advised by his attorney that it is too risky to operate his business as a sole proprietorship and that he should incorporate to limit his liability. Brooks has come to you for advice on the tax implications of incorporation. His balance sheet is presented below. Under the terms of the incorporation, Brooks would transfer the assets to the corporation in return for 100 percent of the companys common stock. The corporation would also assume the companys liabilities (payables and mortgage).

Balance Sheet
		Tax Basis			FMV
Assets
Accounts receivable	$	0		$	9,600
Cleaning equipment (net)		27,300			17,240
Building		54,600			85,350
Land		28,450			56,900
Total assets	$	110,350		$	169,090
Liabilities
Accounts payable	$	0		$	12,875
Salaries payable		0			6,150
Mortgage on land and building		38,910			38,910
Total liabilities	$	38,910		$	57,935

Required:

How much gain or loss (on a per asset basis) does Brooks realize on the transfer of the assets to the corporation?

How much, if any, gain or loss (on a per asset basis) does Brooks recognize?

How much gain or loss, if any, must the corporation recognize on the receipt of the assets of the sole proprietorship in exchange for the corporations stock?

What tax basis does Brooks have in the corporations stock?

What is the corporations tax basis in each asset it receives from Brooks?

How much if any gain or loss (on a per asset basis) will Brooks recognize if he had taken back a 10-year note worth $36,500 plus stock worth $73,850 plus the liability assumption?