What is devon tax basis in the stock he receives

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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 20 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 is Devon's tax basis in the stock he receives in return for his contribution of services to the corporation?

Reference no: EM133177150

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