A transfers machines valued at $170,000 (basis = $150,000)along with $30,000 cash to AB Corporation and B transfers real property valued at $320,000 (basis = $310,000)to the corporation.A receives 40 percent of the outstanding stock and B receives 60 percent.B also receives $20,000 from the corporation.What is AB Corporation's basis for the machines?
A)$150,000
B) $160,000
C)$170,000
D)$180,000
E)None of the above

Question

Quizplus · Accepted Answer

The corporation's basis for the machines is the same as A's basis in the machines, which is $150,000, because the transfer qualifies as a tax-free exchange under IRC Section 351.

A Transfers Machines Valued at $170,000 (Basis = $150,000)along with $30,000