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Sam owns 100% of M Corporation’s single class of stock. Sam transfers land and a building having a $30,000 and $100,000 adjusted basis, respectively, to M Corporation in exchange for additional M Corporation common stock worth $200,000 and IBM stock worth $20,000. The IBM stock had a $5,000 basis on M Corporation’s books. Peter transfers $50,000 in cash for 15% of the M Corporation common stock. What amount of gain or loss is recognized by Sam and M Corporation on the exchange? SamM CorporationA.$20,000$15,000B.$0$15,000C.$0$0D.$20,000$0In conclusion, Sam does not recognize the gain for the property transferred in receipt of M Corporation stock, but will recognize capital gain for the IBM stock at $20,000. M Corporation will not recognize of the property transfer with Sam for its stock and also will not recognize gain for the exchange with Peter. However, M Corporation will recognize the capital gain on the IBM stock minus it adjusted basis in that stock. Therefore, M Corporation will recognize $15,000 capital gain.
Quigley, Roberk, and Storm form a corporation. Quigley exchanges $25,000 of legal fees for 30 shares of stock. Roberk exchanges land with a basis of $10,000 and a fair market value of $100,000 for 60 shares of stock. Storm exchanges $10,000 cash for 10 shares of stock. What amount of income should each shareholder recognize?QuigleyRoberkStormWhich of the following cannot be amortized for tax purposes?