[AMERICANDREAM]

Quigley, Roberk, and Storm form a corporation. Quigley exchanges $25,000 of legal fees for 30 shares of stock. Roberk exchanges land with a basis of $10,000 and a fair market value of $100,000 for 60 shares of stock. Storm exchanges $10,000 cash for 10 shares of stock. What amount of income should each shareholder recognize?

Answer:
Quigley = 25k
Roberk = 90k.
Storm: 0.

I have a question on Roberk. I understand that there is a realized gain here, because Roberk and Storm (excluding Quigley because he rendered services) control 70%, but I thought gain is recognized to the extent of BOOT RECEIVED?

I don’t see Roberk receiving any boot in this question. What’s going on?

[gerald kleiman]

since there is no control 80%, land contributed will be at FMV and reports a gain on the sale of land on his personal income tax return for the difference between hsis basis and FMV
If your using Roger's its on page 2-3

[AMERICANDREAM]

@gerald

Thanks for your response. I'm using Becker and it doesn't explain this concept very well.

I thought shareholders contributing property to a corporation would recognize gain if there is boot involved? (i.e. either cash receipt or cancellation of debt)?

[Author]

Replies