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Ken and Jim agree to go into business together selling old comic books and records. According agreement, Ken will contribute inventory valued at $200,000 in return for 80 percent of the stock in the corporation. Ken's tax basis in the inventory is $100,000. Jim will receive 20 percent of the stock in return for providing accounting services to the corporation (these qualify as organizational expenditures.) The accounting services are valued at $50,000. What amount of gain or loss does Ken realize on the formation of the corporation?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M942488

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