Tristan transfers property with a tax basis of $900 and a fair market value of $1,200 to a corporation in exchange for stock with a fair market value of $900 and $200 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $100 on the property transferred. What is the corporation's tax basis in the property received in the exchange?

A. $1,200

B. $1,100

C. $1,000

D. $900

Question

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15 June, 15:27

Tristan transfers property with a tax basis of $900 and a fair market value of $1,200 to a corporation in exchange for stock with a fair market value of $900 and $200 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $100 on the property transferred. What is the corporation's tax basis in the property received in the exchange?

A. $1,200

B. $1,100

C. $1,000

D. $900

+2

Answers (1)

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Jorge Barnett · Answer 1

Option B is correct.

Corporation tax basis in the property received = $1,100

Explanation:

Option B is correct.

Corporation tax basis in the property received is calculated by adding the tristan transfers property with a tax basis of $900 and $200 which is the profit/gain tristan got.

Corporation tax basis in the property received=tristan transfers property with a tax basis + Gain Received

Corporation tax basis in the property received = $900 + $200

Corporation tax basis in the property received = $1,100