Question

Marie and Ethan form Roundtree Corporation with the transfer of the following. Marie performs personal services for the corporation with a fair market value of $80,000 in exchange for 400 shares of stock. Ethan contributes an installment note receivable (basis $25,000; fair market value $30,000), land (basis $50,000; fair market value $170,000), and inventory (basis $100,000; fair market value $120,000) in exchange for 1,600 shares. If an amount is zero, enter "0". Marie has income of $______ and $_________ basis in her 400 shares of stock and Ethan has income of $________ and $_______ basis in his 1,600 shares of stock.

Answer 1

Marie has income of $80,000 and $80,000 basis in her 400 shares of stock and Ethan has income of $$175,000 and $1600 shares of stock.

Step-by-step explanation:

Data provided

Notes Receivable $25,000

Land $50,000

Inventory $100,000

The computation of given question is below:-

Total Basis = Notes Receivable + Land + Inventory

= $25,000 + 50,000 + $100,000

= $175,000

Marie has income of $80,000 and $80,000 basis in her 400 shares of stock and Ethan has income of $175,000 and $1600 shares of stock.