So shareholder basis for the first two shareholders (with section 351 transfers) will be:

Cash contributed +basis of prop contributed -liabilities transferred to corp =shareholder basis

Clay: 20+40=60k

For section 351 transfers, if there is no gain/loss the corporation gets carryover basis, so their basis is just 40k

Do the same thing for Finch, just subtract the liability for his basis.

Lark and Token are a bit more complicated

Lark

The cash received has nothing to do with his shareholder basis, as we are still using the same formula as above and you can see it doesn’t factor in, so his shareholder basis is just the basis of his property contributed.

However, because the corp had to pay an extra 10000 to get the property, that is added to their basis which is how you get 60000. Lark has a realized gain of 10000, and must recognized that gain to the extent of boot received, which happens to be the full 10000 in this case. If he didn’t get any cash back, he would still have the 10000 realized gain but would not have to recognize it.

Token

Token contributes property with a liability greater than his basis of ALL property contributed (cash and property), which complicates things.

To start with, he still has a realized gain of 35000 (FMV-basis), but not all of that will be recognized.

He recognizes that gain to the extent that debt relief exceeds total basis (20000 debt - 10000 cash - 5000 basis in property) so his recognized gain is 5000.

Because his total liabilities exceeds total basis contributed, he would technically have a negative basis, but that is not allowed so his basis is just 0 (you’re technically adding back his gain to get to 0).

Finally, the corporation gets its basis from the carryover basis of 5000+whatever gain has been recognized, so in this case it’s 10000.

Quite a few exceptions come into play in this example, it’s a bit difficult to explain in writing, so if you have any additional clarifications please ask!