Phillip incorporated his sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock.The property transferred to the corporation had the following fair market values and tax bases.
$$\begin{array} { l r r r r }
& \text { FMV } & \text { Tax Basis } \
\text { Irventory } & \$ 100,000 & \$ 50,000 \
\text { Buildirg } & 100,000 & 250,000 \
\text { Land } & \underline{200,000} & \underline{150,000} \
\text { Total } &\underline{ \$ 400,000} & \underline{\$ 450,000}
\end{array}$$ The fair market value of the corporation's stock received in the exchange was $400,000.The transaction met the requirements to be tax-deferred under section 351.
a.What amount of net gain or loss does Phillip realize on the transfer of the property to his corporation?
b.What amount of gain or loss does Phillip recognize on the transfer of the property to his corporation?

Question

Phillip incorporated his sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock.The property transferred to the corporation had the following fair market values and tax bases.
 $$\begin{array} { l r r r r } 
& \text { FMV } & \text { Tax Basis } \
\text { Irventory } & \$ 100,000 & \$ 50,000 \
\text { Buildirg } &  100,000 & 250,000 \
\text { Land } & \underline{200,000} &  \underline{150,000} \
\text { Total } &\underline{ \$ 400,000} & \underline{\$ 450,000}
\end{array}$$ The fair market value of the corporation's stock received in the exchange was $400,000.The transaction met the requirements to be tax-deferred under section 351.
a.What amount of net gain or loss does Phillip realize on the transfer of the property to his corporation?
b.What amount of gain or loss does Phillip recognize on the transfer of the property to his corporation?

Quizplus · Accepted Answer

The Answer of Phillip incorporated his sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock.The property transferred to the corporation had the following fair market values and tax bases.
 $$\begin{array} { l r r r r } 
& \text { FMV } & \text { Tax Basis } \
\text { Irventory } & \$ 100,000 & \$ 50,000 \
\text { Buildirg } &  100,000 & 250,000 \
\text { Land } & \underline{200,000} &  \underline{150,000} \
\text { Total } &\underline{ \$ 400,000} & \underline{\$ 450,000}
\end{array}$$ The fair market value of the corporation's stock received in the exchange was $400,000.The transaction met the requirements to be tax-deferred under section 351.
a.What amount of net gain or loss does Phillip realize on the transfer of the property to his corporation?
b.What amount of gain or loss does Phillip recognize on the transfer of the property to his corporation?

Phillip Incorporated His Sole Proprietorship by Transferring Inventory, a Building