Carlos transfers property with a tax basis of $500 and a fair market value of $800 to a corporation in exchange for stock with a fair market value of $650 and $50 cash in a transaction that qualifies for deferral under section 351.The corporation assumed a liability of $100 on the property transferred.What is the corporation's tax basis in the property received in the exchange?
A)$800.
B)$600.
C)$550.
D)$450.

Question

Quizplus · Accepted Answer

The corporation's tax basis in the property received in the exchange is $550. This is because the corporation's basis in the property is equal to the transferor's basis in the property plus any gain recognized by the transferor on the exchange. In this case, the transferor's basis in the property is $500 and the transferor recognized no gain on the exchange. Therefore, the corporation's basis in the property is $550.

Carlos Transfers Property with a Tax Basis of $500 and a Fair