1. What are the tax consequences to George? (4 points)

John, Paul, George and Ringo form Scarabs, Inc. They contribute and receive the following: Shareholder John Paul George Ringo Cash Property A Property B Cash Services Contributed FMV AB Debt $400,000 $400,000 $430,000 $250,000 $630,000 $180,000 $230,000 $325,000 $325,000 ? ? Received Shares Boot 400 400 $30,000 400 400