Carolyn transfers property with an adjusted basis of $50,000 and an FMV of $60,000 in exchange for Prime Corporation stock in a Sec. 351 transaction. Carolyn's basis in the stock is

Question

Quizplus · Accepted Answer

In a Sec. 351 transaction, the transferor's basis in the stock received is the same as the basis of the property transferred ($50,000). Therefore, Carolyn's basis in the Prime Corporation stock is $50,000.

Carolyn Transfers Property with an Adjusted Basis of $50,000 and an FMV