On March 1 of the current year, Maya, Arlo, Ximena, and Quinn form Plover Corporation with the following investments:
Transferor Asset Basis to Transferor FMV common
Maya Land $12,000 $30,000
Building 38,000 70,000 400
Mortgage and the
land & building 60,000 60,000
Arlo Equipment 25,000 40,000 300
Ximena Van 15,000 10,000 50
Quinn Accounting Services 0 10,000 100
Maya purchased the land and building several years ago for $12,000 and $50,000, respectively. Maya has claimed straight-line depreciation on the building. Arlo also received a Plover Corporation note for $10,000 due in three years. The note bears interest at a rate acceptable to the IRS. Arlo purchased the equipment three years ago for $50,000. Ximena also receives $5,000 cash. Ximena purchased the van two years ago for $20,000.
a) Does the transaction satisfy the requirements of Sec. 351?
b) What are the amounts and character of the reorganized gains or losses to Maya, Arlo, Ximena, Quinn, and Plover Corporation?
c) What is each shareholder’s basis for his or her Plover stock? When does the holding period for the stock begin?
d) What is Plover Corporation’s basis for its property and services? When does its holding period begin for each property?