McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick

Exercise 23

{Research} Mickey, Mickayla, and Taylor are starting a new business (MMT). To get the business started, Mickey is contributing $200,000 for a 40% ownership interest, Mickalya is contributing a building with a value of $200,000 and a tax basis of $150,000 for a 40% ownership interest, and Taylor is contributing legal services for a 20% ownership interest. What amount of gain is each owner required to recognize under each of the following alterative situations [Hint: Look at §351 and §721.]
a. MMT is formed as a C corporation.
b. MMT is formed as an S corporation.
c. MMT is formed as an LLc.