Danielle transfers land with a $100,000 FMV (basis $95,000)and $85,000 of business-related 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 transferring party (Danielle) does not recognize any gain or loss, and the corporation takes over the basis of the property transferred. Therefore, the adjusted basis of the property to the corporation would be the same as the basis of the property in the hands of the transferring party, which is $95,000. Since the corporation also assumes the $85,000 mortgage, the total basis of the property to the corporation would be $180,000.

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