(Answered) Question - ben max and sam decide to form brownell

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Question - Ben, Max and Sam decide to form Brownell Corporation. On April 12, 2014, Ben contributes equipment with a FMV of $100,000 and a basis of $75,000 in exchange for 100 shares of Brownell Corporation. On May 29, 2014, Max contributes land with a FMV of $550,000 and a basis of $165,000 in exchange for 550 shares of Brownell Corporation. On June 3, 2014, Sam transfers property with a FMV of $350,000 and a basis of $125,000 for 350 shares of Brownell Corporation.

a. If the three exchanges are part of a prearranged plan, what gain or loss will Ben, Max and Sam recognize on the exchange?

b. If Sam's basis in the property transferred was $450,000 rather than $125,000 is there a better way to structure this transaction?

c. Assume that Ben and Max had exchanged their property for stock 3 years ago and Sam had exchanged her property for stock in the current year. Sam's transfer is not a part of a prearranged plan with Ben and Max to incorporate the business. What gain will Sam recognize on the transfer (using the original facts from the problem)?

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