Sean and Vickie Are Going to Establish a Business

Essay

Sean and Vickie are going to establish a business.Sean will contribute cash of $250,000 for a 50% interest,and Vickie will contribute land and a building worth $270,000 (adjusted basis of $90,000)for a 50% interest.The land and building is encumbered by a $20,000 mortgage which the entity assumes.
a.Determine the tax consequences of the contribution to Sean, Vickie, and the entity if the business is an S corporation.
b.Determine the tax consequences of the contribution to Sean, Vickie, and the entity if the business is a partnership.
c.Determine the tax consequences of the contribution to Sean, Vickie, and the entity if the business is a C corporation.