Tara transfers land with a $690,000 adjusted basis and a $700,000 FMV to a corporation in a Sec. 351 transfer. Immediately after the transfer, Tara owns 100% of the corporation- stock with a FMV of $615,000. In addition, $85,000 of business- related liabilities are assumed by the corporation with respect to the transfer. No other property is transferred. Tara's recognized gain on the transfer is

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Quizplus · Accepted Answer

In a Sec. 351 transfer, no gain or loss is recognized if the transferor controls the corporation immediately after the exchange. Here, Tara owns 100% of the corporation after the transfer, and the liabilities assumed do not exceed the adjusted basis of the property transferred, so no gain is recognized.

Tara Transfers Land with a $690,000 Adjusted Basis and a $700,000