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What are the tax consequences to sam

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Reference no: EM133122426

Question - Sam wants to contribute his sole proprietorship assets to a corporation and bring in his friend Julie as a shareholder. Julie will provide services in the future to the corporation and will receive 25% of the stock. Sam will contribute the assets of his business to the corporation in exchange for 75% of the stock. The assets consist of equipment, inventory, a patent, and goodwill. The total FMV of the assets is $1.5 million and the total bases is $700,000.

Required -

a. What are the tax consequences to Sam, Julie, and the corporation?

b. Is there a better way to structure this?

Reference no: EM133122426

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