T operated a business as an accrual basis sole proprietorship for several years. The balance sheet for the business is as follows:

Adjusted Fair market

Basis value

Accounts receivable $130,000 $130,000

Inventory 15,000 60,000

Machinery (see note) 105,000 200,000

Capital assets 50,000 10,000

Totals $300,000 $400,000

Note: $20,000 of 1245 depreciation recapture relates to the machinery.

T incorporated the business in a transaction qualifying under 351. In exchange for the transfer of the business assets, the new corporation assumed $50,000 of business liabilities, and distributed to T stock worth $290,000 and boot worth $60,000.

What is the gain/loss recognized by T?

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What is the character (i.e., capital gain, OI) of the gain recognized by T, if any?

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What basis will T assign to the common stock received in this transaction?

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What basis will T assign to the boot received in this transaction?

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What basis will the transferee corporation assign to the inventory acquired in this transaction?

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