Cornelia transfers property valued at $400 (basis  $350) to Wayside Corporation (an existing corporation) in exchange for 50 percent of its stock.

Ferdinand transfers property valued at $450 (basis  $260) in exchange for the other 50 percent of Wayside’s stock and property valued at $50 (basis  $20).

a. What are Cornelia’s and Ferdinand’s realized gains or losses?

b. What are their recognized gains or losses?

c. What are their bases in Wayside’s stock?

d. What is Wayside’s basis in the property received?

e. Does Wayside have any other tax consequences?

AppendixLO1