Yang, Jane, and Li incorporated YJL Corp. Yang transferred equipment (FMV = $60,000, basis = $55,000) in exchange for 25% of YJL Corp.’s stock (FMV = $50,000) and $10,000 cash. Jane transferred land (FMV = $110,000; basis = $80,000) in exchange for 50% of YJL Corp.’s stock (FMV = $100,000) and $10,000 cash. Li contributed $50,000 cash in exchange for 25% of YJL Corp.’s stock (FMV = $50,000). Assume YJL Corp. is a controlled corporation of Yang, Jane, and Li. What is Yang’s basis in YJL Corp. stock? and What is YJL Corp’s basis in the equipment?

During the year, Leak Construction Corp. distributed a crane used in its business to Q, who owns 100 percent of the stock. The crane was worth $10,000 and had a basis of $19,000. The corporation also distributed land worth $70,000, with a basis of $40,000. Leak will report

Done

Newton is a one-third owner of ProRite Partnership. Newton has decided to sell his interest in the business to Betty for $50,000 cash plus the assumption of his share of ProRite’s liabilities. Assume Newton’s inside and outside bases in ProRite are equal. ProRite shows the following balance sheet as of the sale date:    Tax Basis FMV Assets     Cash $ 80,000 $ 80,000 Receivables 25,000 25,000 Inventory 40,000 85,000 Land 30,000 20,000 Totals $ 175,000 $ 210,000 Liabilities and capital     Liabilities $ 60,000   Capital— Newton 38,333   Capital— Barbara 38,334   Capital— Liz 38,333   Totals $ 175,000   What are the amount and character of Newton’s recognized gain or loss?

On the formation of X Corp, Moustapha transfers land with a basis of $40,000 and a FMV of $60,000 in exchange for 60 shares (60%) of common stock of X Corp, and Ava transfers equipment with a basis of $40,000 and a FMV of $10,000 in exchange for 40 shares (40%). Two months later, pursuant to a prearranged binding agreement, Ava sells all her X Corp stock to Rose for $40,000 cash. What are the tax consequences to Moustapha and Ava of the transfers to X Corp? O $20,000 gain to Moustapha; no gain/loss to Ava O $20,000 gain to Moustapha; $30,000 loss to Ava O No gain/loss to either O No gain/loss to Moustapha; $30,000 loss to Ava