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Conan and Andy decide to form a new corporation, LN Corp. Conana contributes property with...

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Accounting

Conan and Andy decide to form a new corporation, LN Corp. Conana contributes property with a basis of $10,000 and a fair market value of $18,000 in exchange for five shares of LN stock and $13,000 in cash, which LN borrows from a bank to finance. Andy contributes property with a basis of $35,000 and a fair market value of $80,000 in exchange for 80 shares of LN stock.

a. How much taxable gain or loss will Conan recognize because of the transaction?

b. What basis will Conan take in the LN stock he receives?

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