Carol and Sugar Form a Corporation

Essay

Carol and Sugar form a corporation. Carol transfers property valued at $550,000 (basis of $400,000) to the corporation in exchange for 50 percent of the corporate stock valued at $500,000. Sugar transfers property valued at $700,000 (basis of $400,000) and a $300,000 mortgage that the corporation assumes for the other 50 percent of the stock. In addition Sugar transfers $100,000 cash to the corporation and the corporation then transfers $50,000 cash to Carol along with the corporate stock. What are Carol and Sugar's realized and recognized gains or losses and their bases in the stock received. What is the corporation's basis in the assets received?