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Paul owns undeveloped land (a capital asset, FMV $100,000 and adjusted basis $40,000) and transfers...

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Accounting

Paul owns undeveloped land (a capital asset, FMV $100,000 and adjusted basis $40,000) and transfers the land to the newly created Three Dog Corporation in exchange for the alternative consideration listed below. Assume there is no Original Issue Discount (OID) in any debt, there is not any non-qualified preferred stock and Paul is the sole shareholder. What is the income recognition, if any, and basis consequences to Paul and Three Dog Corporation on the different exchanges listed below?

a. 20 shares of common stock (FMV $20,000) and 80 shares of $1,000 preferred stock paying 8% cumulative dividends

b. 20 shares of common stock (FMV $80,000) and warrants for Jefferson stock (FMV $20,000).

c. 20 shares of common stock (FMV $20,000) and $80,000 principal amount (and FMV) of 20-year, registered bonds paying half the principal after 10 years and the rest at maturity (with 8% interest payable annually).

d. Same as immediately above, except that Paul already owned the 20 shares of Jefferson common stock (acquired for $20,000 cash one year ago) and transfers the land for $100,000 in Three Dog bonds (principal and FMV) and the bonds pay 8% annual interest.

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