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Sam and Vera Are Going to Establish a Business

Question 98

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Sam and Vera are going to establish a business.Sam will contribute cash of $100,000 for a 50% interest,and Vera will contribute land and a building worth $135,000 (adjusted basis of $65,000)for a 50% interest.The land and building is encumbered by a $35,000 mortgage which the entity assumes.Determine the tax consequences of the contribution to Sam,Vera,and the entity if the business is:
Sam and Vera are going to establish a business.Sam will contribute cash of $100,000 for a 50% interest,and Vera will contribute land and a building worth $135,000 (adjusted basis of $65,000)for a 50% interest.The land and building is encumbered by a $35,000 mortgage which the entity assumes.Determine the tax consequences of the contribution to Sam,Vera,and the entity if the business is:

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