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22 October, 15:49

Carlos transfers property with a tax basis of $820 and a fair market value of $1,145 to a corporation in exchange for stock with a fair market value of $995 and $69 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $81 on the property transferred. What is the corporation's tax basis in the property received in the exchange

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  1. 22 October, 18:07
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    The corporation's tax basis in the property received in the exchange is $889

    Explanation:

    Property was transferred by Carlos, and at the time of Transfer Carlos basis on the Property is $820.

    From "Carryover basis" rule,

    Corporation Tax basis on Property = (Basis of Carlos) + (Gain recognized)

    So, Corporation's tax basis in the Property

    = $820 + $69

    = $889
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Home » Business » Carlos transfers property with a tax basis of $820 and a fair market value of $1,145 to a corporation in exchange for stock with a fair market value of $995 and $69 in cash in a transaction that qualifies for deferral under section 351.
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