For the past five years, Peter Jones has owned all 100 shares of Trenton Corporation stock. This year, Mary Smith contributes property with a $50,000 basis and an $80,000 FMV for 80 newly-issued Trenton shares. At the same time, Peter contributes $15,000 in cash for 15 newly-issued Trenton shares.
- Describe the tax issue(s) regarding the exchanges that Peter and Mary should consider.
•Explain how this tax issue(s) would change if Peter and Mary were brother and sister.