Question: When completing the following problems, please consult chapter 14 of the Textbook and I.R.c. 351 et seq.
1. Mika and Miles agree to form Charter Away Inc. a small family boat rental business. Mika contributes 20 sailboats purchase for $70,000 but worth $170,000 at the time of incorporation. Miles contributes a small piece of waterfront property and a dock purchased many years ago for $30,000, with a fair market value of $150,000, plus cash of $20,000. In return for the contributions, each receives a 50% of the 200 authorized common shares of charter Away, Inc. What are the tax consequences to Mika? What are the tax consequences to Miles? What are the tax consequences to Charter Away, Inc?
2. What result (s) if Mika's sailboats were originally purchased for $180,000?