Taylor transfers land worth $300,000, basis of $200,000, to a newly formed corporation, Rosemary Corporation, for all of Rosemary's stock, worth $250,000, and a 10-year note.The note was executed by Rosemary and made payable to Taylor in the amount of $50,000.As a result of the transfer:

Question

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Taylor will recognize a gain of $50,000, which is the excess of the stock received ($250,000) over the basis of the land transferred ($200,000). The basis of the land for Rosemary Corporation will be the same as Taylor's basis ($200,000). The note does not affect the gain recognition.

Taylor Transfers Land Worth $300,000, Basis of $200,000, to a Newly