On July 1,2013,Robert forms the Yew Corporation.In exchange for 100 percent of the corporation's stock,Robert contributes land with a fair market value of $100,000.Robert acquired the land 5 years ago at a cost of $30,000.At the date of the contribution,the land is subject to a $10,000 mortgage which the corporation assumes.What is the basis of the land to Yew Corporation?

Question

Quizplus · Accepted Answer

The basis of the land to Yew Corporation is the same as Robert's adjusted basis in the land, which is $30,000, as the transfer qualifies under IRC Section 351, where no gain or loss is recognized if property is transferred to a corporation by one or more persons solely in exchange for stock and immediately after the exchange such person or persons are in control of the corporation. The mortgage assumed by the corporation does not affect the basis.

On July 1,2013,Robert Forms the Yew Corporation