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Business, 01.03.2021 22:00 braxtengames

This year, John, Meg, and Karen form Frost Corporation. John contributes land purchased as an investment four years ago for $15,000 that has a $30,000 FMV in exchange for 30 shares of Frost stock. Meg contributes machinery (Sec. 1231 property) purchased four years ago and used in her business having a $35,000 adjusted basis and a $30,000 FMV in exchange for 30 shares of Frost stock. Meg had purchased the machinery 4 years ago; $10,000 of depreciation has been claimed by Meg prior to the exchange. Karen contributes services worth $20,000 in exchange for 20 shares of Frost stock. A) What is the amount of John's recognized gain or loss? B) What is John's basis in his Frost shares? When does his holding period begin?
C) What is the amount of Meg's recognized gain or loss?
D) What is Meg's basis in her Frost shares? When does her holding period begin?
E) How much income, if any, must Karen recognize?
F) What is Karen's basis in her Frost shares? When does her holding period begin?
G) What is Frost Corporation's basis in the land and the machinery? When does its holding period begin? How does Frost Corporation treat the amount paid to Karen for her services?

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