Alan, an Owl Corporation shareholder, makes a contribution to capital of equipment to Owl, basis of $40,000 and fair market value of $50,000. Owl's basis of the equipment that Alan contributes is equal to $50,000, the property's fair market value.

Question

Quizplus · Accepted Answer

Owl's basis in the equipment that Alan contributes is equal to Alan's adjusted basis in the equipment at the time of the contribution, which is $40,000, not the fair market value of $50,000.

Alan, an Owl Corporation Shareholder, Makes a Contribution to Capital