Marie and Ramesh's current income, gain, or loss and the basis that each takes in the Roundtree stock are: $175,200. $175,200, $0, $475,640.
Marie has a basis equal to fair market value of $175,200.
Ramesh has no recognized gain on the receipt of stock reason being that all of the consideration that Ramesh transfers to Roundtree stock qualifies as property. Hence, Ramesh gain is $0.
Ramesh basis:
Ramesh basis=$25,000 + $50,000 + $400,640
Ramesh basis=$475,640
Hence:
Marie has income of $175,200 and $175,200 basis in her 400 shares
of stock and Ramesh has income of $0 and $475,640 basis in her 1600 shares of stock.
Inconclusion Marie and Ramesh's current income, gain, or loss and the basis that each takes in the Roundtree stock are: $175,200. $175,200, $0, $475,640.
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The determination of Marie and Ramesh's current income, recognized gain or loss, and basis of shareholding is as follows:
Marie Ramesh
Current income $175,200 $0
Recognized gain $175,200 $0
Basis in Roundtree $175,200 $475,640
The basis of shareholding interest is the amount of cash contributed plus the adjusted basis value of the contributed property. According to IRS, no gain or loss is recognized upon contributions of property in exchange for a shareholding interest.
Marie's basis = $175,200
Marie's shareholding in Roundtree Corporation = 400 shares
Ramesh's basis = $475,640 ($25,000 + $50,000 + $400,640)
Ramesh's shareholding in Roundtree Corporation = 1,600 shares
Thus, we can conclude that Marie's basis in Roundtree Corporation is $175,200 with a shareholding of 400 shares while Ramesh has a basis of $475,640 with a shareholding of 1,600 shares.
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