193 As part of the incorporation Ginny received 10 percent o

19-3 As part of the incorporation, Ginny received 10 percent of the stock in 360 Air valued at $60,000 in exchange for her services in setting up the corporation. Will Ginny defer recognition of the $60,000 “gain” she realizes on the transaction?

Solution

No. Ginny wont have to recognise a gain of $60,000 because the fair market value of the stock received is equal to the compensation to be received in return for her service in setting up the corporation.

How to report?

Ginny Must report a compensation income of $60,000.

why not ? Because service aren\'t considered as property under definition of US CODE 351