Danielle transfers land with a $100,000 FMV (basis $95,000)and $85,000 of liabilities to a corporation in exchange for 100% of the corporation's stock with a FMV of $15,000.The corporation qualifies as a 351 transfer.The corporation assumes the $85,000 mortgage.What is the adjusted basis of the property to the corporation?

Question

Quizplus · Accepted Answer

In a 351 transfer, the transferor's basis in the property transfers to the corporation. Therefore, the adjusted basis of the property to the corporation is $95,000. Since the corporation assumes the $85,000 mortgage, the corporation's adjusted basis in the property is $95,000 - $85,000 = $10,000. The FMV of the stock received is irrelevant to the adjusted basis of the property.

Danielle Transfers Land with a $100,000 FMV (Basis $95,000)and $85,000