Reference no: EM132993267

Question - In the current? year, Mitch?, Stu?, and Kim form Agua Corporation. Mitch contributes land? (a capital? asset) having a $62,500 FMV in exchange for 170 shares of Agua stock. He purchased the land three years ago for $110,000. Stu contributes machinery? (Sec. 1231 property purchased four years? ago) having a $45,500 adjusted basis and a $37,500 FMV in exchange for 120 shares of Agua stock. Kim contributes services worth $25,000 in exchange for 50 shares of Agua stock.

Required -

Requirement a. What is the amount of Mitch?'s recognized gain or? loss?

Requirement b. What is Mitch?'s basis in his Agua ?shares? When does his holding period? begin?

Requirement c. What is the amount of Stu?'s recognized gain or? loss?

Requirement d. What is Stu?'s basis in his Agua ?shares? When does his holding period? begin?

Requirement e. How much? income, if? any, does Kim ?recognize?

Requirement f. What is Kim?'s basis in her Agua ?shares? When does her holding period? begin?

Requirement g. What is Agua?'s basis in the land and the? machinery? When does its holding period? begin? How does Agua treat the amount paid to Kim for her? services? Determine the basis in the machinery and when the holding period would begin.

Determine how Agua will treat the amount paid to Kim for her services.