Melanie and Sonny Form Bird Enterprises

Essay

Melanie and Sonny form Bird Enterprises. Sonny contributes cash of $100,000 and land worth $50,000 adjusted basis of $30,000). Melanie contributes land and a building worth $280,000 adjusted basis of $200,000) and performs services worth $20,000 associated with the formation of the entity. Melanie receives a two-thirds ownership interest and Sonny receives a one-third ownership interest. Determine the tax consequences of the contributions to Melanie, Sonny, and Bird if the business is:
a. An S corporation.
b. A C corporation
c. A partnership.