Samuel and Zachary formed S&Z Accounting & Tax Services, Inc. on 1/1/15. Each sh

Question

Samuel and Zachary formed S&Z Accounting & Tax Services, Inc. on 1/1/15. Each shareholder contributed the following in exchange for his corporate stock:

                                                                         Asset (Basis)           Asset (FMV)        Shares received

Samuel - property (acquired 5 years ago)         25,000                       40,000                     90

Zachary - services                                                 0                              20,000                   10

                                                                           25,000                     60,000                       100

a) Does SEC. 351 apply?

b) compute Samuels's realized gain or loss

c) compute Samuels's recognized gain or loss

d) what is samuel's basis in his stock

e) what is the corporation's basis in the property received from samuel

f) does Zachary have to recognize any income? if so, how much and what is its nature? What is his basis in his stock?

Explanation / Answer

Realized Gain is , 40,000.00

       C) Recognized gain 15,000.00

       d) Samules Stock basis is 90

       e) The corporation's basis in the property received from Samuel is 25,000

     f) yes, it is 20,000 how much and as a service charge ? it is 10 his basis in his stock?

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