TJ Magnasen contributed assets with a $200,000 adjusted basis and a $525,000 FMV to Adelante Corporation in exchange for all of its stock. The corporation conducted operations for five years and was liquidated. TJ received the following in a liquidating distribution: $615,000 cash (less federal income taxes of 21% owed on the liquidation by the corporation) The assets that he had originally contributed, which now have a $150,000 adjusted basis and a $615,000 FMV.

a) What are the tax consequences of the corporate formation? (Shareholders/corporations recognized gain/loss, shareholders basis and holding period in his stock, corporations basis and holding period in contributed property)

b) What are the tax consequences of the corporate liquidation? (Shareholders/corporations recognized gain/loss, shareholders basis and holding period in distributed property)