Loonis Inc

Multiple Choice

Loonis Inc. and Rhea Company formed LooNR Inc. by transferring business assets in exchange for 1,000 shares of LooNR common stock. Loonis transferred assets with a $820,000 FMV and a $444,000 adjusted tax basis and received 820 shares. Rhea transferred assets with a $180,000 FMV and a $75,000 adjusted tax basis and received 180 shares. Determine Loonis and Rhea's tax basis in their LooNR stock and LooNR's aggregate tax basis in the transferred assets.

A) Loonis' basis is $444,000; Rhea's basis is $75,000; LooNR's basis is $1 million.
B) Loonis' basis is $444,000; Rhea's basis is $180,000; LooNR's basis is $1 million.
C) Loonis' basis is $444,000; Rhea's basis is $180,000; LooNR's basis is $624,000.
D) None of these choices are correct.