Corporation stock equally distributed problem

Reference no: EM13157596

Kevin and Nicole form Indigo Corporation with the following transfers: inventory from Kevin (basis of $360,000 and fair market value of $400,000) and improved real estate from Nicole (basis of $320,000 and fair market value of $375,000). Nicole, an accountant, agrees to contribute her services (worth $25,000) in organizing Indigo. The corporation's stock is distributed equally to Kevin and Nicole. As a result of these transfers:

a. Indigo can deduct $25,000 as a business expense

b. Nicole has a recognized gain of $55,000 on the transfer of the real estate

c. Indigo has a basis of $360,000 in the inventory

d. Indigo has a basis of $375,000 in the real estate

e. None of the above

Reference no: EM13157596

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