LO.1 At a point when Robin Corporation has been in existence for six years, shareholder Ted transfers real estate (adjusted basis of $20,000 and fair market value of

$100,000) to the corporation for additional stock. At the same time, Peggy, the other shareholder, acquires one share of stock for cash. After the two transfers, the percentages of stock ownership are as follows: 79% by Ted and 21% by Peggy.

a. What were the parties trying to accomplish?

b. Will it work? Explain.