Rachelle transfers property with a tax basis of $800 and a fair market value of $900 to a corporation in exchange for stock with a fair market value of $750 and $50 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed aliability of $100 on the property transferred. What is the corporation's tax basis in the property received in the exchange?

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The corporation's tax basis in the property is the transferor's basis ($800) increased by any gain recognized by the transferor ($50 cash received + $100 liability assumed - $750 FMV of stock = $100 gain recognized), resulting in a basis of $850.

Rachelle Transfers Property with a Tax Basis of $800 and a Fair