Elaine, James, and Jeremy form Forest Corporation by transferring the following items to the corporation:                                                                 Items transferred                                                        Basis                Fair Market Value               Number of Shares Issued From Elaine:     Cash                                         $60,000                           $60,000                         200 shares    Equipment                                 30,000                           340,000                            From James:    Land                                         100,000                          540,000                           200 shares    Mortgage                                140,000                          140,000                               From Jeremy:       Office equipment                    50,000                           260,000*                         100 shares   Besides the receiving 100 shares of stock, Jeremy also received $60,000 of cash.  Forest Corporation assumed the mortgage transferred by James.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Elaine, James, and Jeremy form Forest Corporation by transferring the following items to the corporation:

                                                                Items transferred

                                                       Basis                Fair Market Value               Number of Shares Issued

From Elaine:

    Cash                                         $60,000                           $60,000                         200 shares

   Equipment                                 30,000                           340,000                         

 

From James:

   Land                                         100,000                          540,000                           200 shares

   Mortgage                                140,000                          140,000                            

 

From Jeremy:   

   Office equipment                    50,000                           260,000*                         100 shares

 

Besides the receiving 100 shares of stock, Jeremy also received $60,000 of cash.  Forest Corporation assumed the mortgage transferred by James.

What is Elaine’s basis in her Forest Corporation stock?

Determine the amount of income, gain or loss (if any) that James has from this transaction.

What is James’ basis in his Forest Corporation stock?

Determine the amount of income, gain, or loss (if any) that Jeremy has from this transaction.

What is Jeremy’s basis in his Forest Corporation stock?

What basis does Forest Corporation has in:

  • Equipment

  • Land

  • Office equipment
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