Individuals Allen and Betty are form an S corporation, with Allen contributing cash of $100,000 for a 50% interest and Betty contributing appreciated ordinary income property with an adjusted basis of $20,000 and a fair market value of $100,000.
i. Determine Betty's initial basis in her stock, assuming that she receives a 50% interest.
ii. The S corporation sells the property for $120,000. Determine Allen's and Betty's stock basis after the sale.
iii. Determine Allen's and Betty's gain or loss if the company is liquidated.