In the current? year, Mick?, Hank?, and Dawn form AresCorporation. Mick contributes land? (a capital? asset) having a$62,500 FMV in exchange for 200 shares of Ares stock. He purchasedthe land three years ago for $110,000. Hank contributes machinery?(Sec. 1231 property purchased four years? ago) having a $75,000adjusted basis and a $37,500 FMV in exchange for 120 shares of Aresstock. Dawn contributes services worth $25,000 in exchange for 80shares of Ares stock.
a. What is the amount of Mick?'s recognizedgain or? loss?
b. What is Mick?'s basis in his Ares shares?When does his holding period? begin?
c. What is the amount of Hank?'s recognizedgain or? loss?
d. What is Hank?'s basis in his Ares shares?When does his holding period? begin?
e. How much? income, if? any, does Dawnrecognize?
f. What is Dawn?'s basis in her Ares shares?When does her holding period? begin?
g. What is Ares?'s basis in the land and the?machinery? When does its holding period? begin? How does Ares treatthe amount paid to Dawn for her? services?
