Conan and Andy decide to form a new corporation, LN Corp. Conan contributes property with a basis of $10,000 and a fair market value of $18,000 in exchange for five shares of LN stock and $13,000 in cash, which LN borrows from a bank to finance. Andy contributes property with a basis of $35,000 and a fair market value of $80,000 in exchange for 80 shares of LN stock. How much taxable gain or loss will Conan recognize as a result of the transaction? What basis will Conan take in the LN stock he receives?

Conan and Andy decide to form a new corporation, LN Corp. Conan contributes property with a basis of $10,000 and a fair market value of $18,000 in exchange for five shares of LN stock and $13,000 in cash, which LN borrows from a bank to finance. Andy contributes property with a basis of $35,000 and a fair market value of $80,000 in exchange for 80 shares of LN stock. How much taxable gain or loss will Conan recognize as a result of the transaction? What basis will Conan take in the LN stock he receives?

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter18: Corporations: Organization And Capital Structure

Section: Chapter Questions

Problem 30P

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