Since transferred liabilities of $50,000 exceed aggregate basis of $25,000, both parties must recognize gain.
Harvey may have a different basis and holding period in different shares of the stock received.
Most likely, there will be some general business tax credit recapture upon the transfer of assets to the corporation.
At least one of the parties may have compensation income in the above transaction.
This question was asked on Jan 07, 2013.
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