What amount of income, gain, or loss does devon recognize

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Question - Sam and Devon agree to go into business together selling college-licensed clothing. According to the agreement, Sam will contribute inventory valued at $100,000 in return for 80 percent of the stock in the corporation. Sam's tax basis in the inventory is $60,000. Devon will receive 25 percent of the stock in return for providing accounting services to the corporation (these qualify as organizational expenditures). The accounting services are valued at $25,000.

Assume Devon received 25 percent of the stock in the corporation in return for his services.

What amount of income, gain, or loss does Devon recognize on the formation of the corporation?

Reference no: EM133172171

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