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20 May, 08:50

Mandel transferred property to his new corporation in a section 351 transaction. Among the several properties transferred by Mandel was land with a fair market value of $200,000 and a tax basis of $250,000. In all cases, the corporation will always take a tax basis in the land of $200,000 to prevent the "built-in loss" from being transferred from Mandel to the corporation.

True / False.

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  1. 20 May, 10:49
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    False

    Explanation:

    § 351 establishes that businesses shall not recognize any capital gain or loss from property transferred to them in exchange of stocks or partnership share. So the businesses have to record this type of transactions at their fair market value and not their tax basis.
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