Green Corporation transfers assets with a fair market value of $650,000 (basis of $300,000) to Brick Corporation.Green receives Brick voting stock worth $600,000 and cash of $50,000.Brick assumes none of Green's $37,500 liabilities.Green distributes the Brick stock and its liabilities to its shareholders.Green recognizes gain on the transfer of:

Question

Quizplus · Accepted Answer

Green Corporation recognizes a gain equal to the lesser of the boot received ($50,000 cash) or the realized gain ($650,000 FMV - $300,000 basis = $350,000). Since $50,000 is less than $350,000, the recognized gain is $50,000.

Green Corporation Transfers Assets with a Fair Market Value of $650,000