Cherie transfers two assets to a newly- created corporation. The first asset has an adjusted basis of $40,000 and an FMV of $50,000. The second asset has an adjusted basis of $35,000 and an FMV of
$25,000. Cherie receives stock with an FMV of $66,000 and $9,000 cash. Cherie must recognize a gain of

Question

Quizplus · Accepted Answer

Cherie must recognize a gain to the extent of the cash received. The total FMV of the assets transferred is $75,000 ($50,000 + $25,000), and she receives $75,000 in total ($66,000 stock + $9,000 cash). The gain is recognized on the cash received, which is $9,000 minus the loss on the second asset ($10,000), resulting in a $6,000 gain.

Cherie Transfers Two Assets to a Newly- Created Corporation