Antoine transfers property with a tax basis of $500 and a fair market value of $600 to a corporation in exchange for stock with a fair market value of $550 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $50 on the property transferred. What is Antoine's tax basis in the stock received in theexchange?

Question

Quizplus · Accepted Answer

Antoine's tax basis in the stock is calculated as the original basis of the property transferred ($500) minus the liability assumed by the corporation ($50), resulting in a basis of $450.

Antoine Transfers Property with a Tax Basis of $500 and a Fair