Reference no: EM132854975

Questions-

Q1. Eudora and James form Jazz Corporation with the transfer of the following. Eudora performs personal services for the corporation with a fair market value of $96,000 in exchange for 800 shares of stock. James contributes an installment note receivable (basis $25,000; fair market value $30,000), land (basis $50,000; fair market value $170,000), and inventory (basis $147,200; fair market value $184,000) in exchange for 3,200 shares. Determine Eudora and James's current income, gain, or loss; calculate the basis that each takes in the Jazz stock.

Q2. Grady exchanges qualified property, basis of $30,000 and fair market value of $36,000, for 60% of the stock of Eadie Corporation. The other 40% of the stock is owned by Pedro, who acquired it five years ago. Calculate Grady's current income, gain, or loss and the basis he takes in his shares of Eadie stock as a result of this transaction.

Q3. Diego transfers real estate with an adjusted basis of $325,000 and fair market value of $455,000 to a newly formed corporation in exchange for 100% of the stock. The corporation assumes the liability on the transferred real estate in the amount of $386,750. Determine Diego's recognized gain on the transfer and the basis for his stock.

Q4. Ariel is an employee of Flounder Corporation. In the current year, she receives a cash salary of $151,200 and also is given 50 shares of Flounder stock for services she renders to the corporation. The shares in Flounder Corporation are worth $1,000 each. For tax purposes, how much income will Ariel recognize from the receipt of the 50 shares and what is Flounder Corporation's total compensation deduction for Ariel's services?