On June 3 of the current year, Eric, Florence, and George form Wildcat Corporation and transfer the following items:
Eric Land $200,000 $50,000 500
Florence Equipment -0- 25,000 250
George Legal services -0- 25,000 250
Eric purchased the land (a capital asset) five years ago for $200,000. Florence purchased the equipment three years ago for $48,000. The equipment has been fully depreciated.
a. Does the transaction meet the requirements of Sec. 351?
b. What are the amount and character of the gains or losses recognized by Eric, Florence, George, and Wildcat?
c. What is each shareholder's basis in his or her Wildcat stock? When does the holding period for the stock begin?
d. What is Wildcat's basis in the land, equipment, and services? When does the holding period for each property begin?