Business, 04.04.2020 07:42 SmolBeanPotato

Firm CS performed consulting services for Company P. The two parties agreed that Company P would pay for the services by transferring investment securities to Firm CS. At date of transfer, the securities had a $38,500 FMV. Company P’s tax basis in the securities was $25,000.

a. How much income must Firm CS recognize on receipt of the securities? What is Firm CS’s tax basis in the securities?

b-1. How much income must Company P recognize on disposition of the securities?

b-2. What is the character of the income?

c-1. Can Company P deduct the consulting expense?

c-2. If so, what is the amount of the deduction?

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Firm CS performed consulting services for Company P. The two parties agreed that Company P would pay...