Mrs.Brinkley transferred business property (FMV $340,200; adjusted tax basis $111,700)to M&W Inc.in exchange for a 36% interest in M&W Partnership.Compute M&W's recognized gain on its exchange of an equity interest for property and determine M&W's tax basis in the property received from Mrs.Brinkley.

Question

Quizplus · Accepted Answer

M&W recognizes no gain on the exchange of an equity interest for property under IRC Section 721. The tax basis in the property received is the same as Mrs. Brinkley's adjusted tax basis, which is $111,700.

MrsBrinkley Transferred Business Property (FMV $340,200; Adjusted Tax Basis $111,700)to