LO.2, 4 Sara and Jane form Wren Corporation. Sara transfers property, basis of $25,000 and fair market
Question:
LO.2, 4 Sara and Jane form Wren Corporation. Sara transfers property, basis of $25,000 and fair market value of $200,000, for 50 shares in Wren Corporation. Jane transfers property, basis of $10,000 and fair market value of $185,000, and agrees to serve as manager of Wren for one year; in return, Jane receives 50 shares in Wren. The value of Jane’s services to Wren is $15,000.
a. What gain or income will Sara and Jane recognize on the exchange?
b. What basis will Wren Corporation have in the property transferred by Sara and Jane?
How should Wren treat the value of the services Jane renders?
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Related Book For 
South Western Federal Taxation 2011 Taxation Of Business Entities
ISBN: 9780538498616
14th Edition
Authors: James E. Smith, William A. Raabe, David M. Maloney
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