Shareholder's Basis
Response to the following problem:
Jeannie is not currently a shareholder in ABC corporation. Jeannie contributes $20,000 cash and equipment worth $30,000 in exchange for 25% of the stock in ABC. Jeannie's basis in the equipment is $7,000. No other transfers were made at this time
a. How much gain or loss do Jeannie and the corporation recognize on the transfer?
b. What is Jeannie's basis in the stock?
c. What is the corporation's basis in the equipment?