Janice and Thom form Level Corporation. Janice transfers equipment (worth $60,000, basis of $40,000) for 50% of the stock in Level.

Janice and Thom form Level Corporation. Janice transfers equipment (worth $60,000, basis of $40,000) for 50% of the stock in Level. Thom transfers inventory (worth $20,000, adjusted basis of $15,000) and provides services worth $40,000 for 50% of the stock.

If an amount is zero, enter "0".

Because this transaction does not meet the control of the corporation requirement, Janice has income of $ 0 and Thom has income of $ 40,000.

Expert Solution

Because this transaction MEET the control of the corporation requirement, Janice has income of $0 and Thom has income of $

Explanation:

Based on the information we were told that Thom provide service that is worth $40,000 which means that the amount of $40,000 is Thom income but we were not told that Janice has an income, which means that Janice will have an income of $0.

Hence, Because this transaction MEET the control of the corporation requirement, Janice has income of $0 and Thom has income of $40,000.

Junaid answered 1 year ago

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