Lesson 3B-In Class Exercise-Boot Received by Shareholder

Jane transfers land (a capital asset) having a $40,000 adjusted basis to Jones Corporation in a 351 transaction.  In exchange, Jane receives the following:

	Consideration							FMV
	100 Shares of Jones Corp common stock			$100,000
	Jones Corp bond due in 10 years				    30,000
	Jones Corp note due in 3 years				    20,000
									$150,000

a)	What are the amount and character of character of Jane’s realized gain or loss?

b)	What are the amount and character of Jane’s recognized gain or loss?

c)	What is Jane’s basis in her stock, bond and note?

d)	What is Jones Corp’s basis for the land?