Mitchell and Powell form Green Corporation. Mitchell transfers property (basis of $105,000 and fair market value of $90,000) while Powell transfers land (basis of $8,000 and fair market value of $75,000) and $15,000 of cash. Each receives 50% of Green Corporation's stock (total value of $180,000). As a result of these transfers:
A) Mitchell has a recognized loss of $15,000, and Powell has a recognized gain of $67,000.
B) Neither Mitchell nor Powell has any recognized gain or loss.
C) Mitchell has no recognized loss, but Powell has a recognized gain of $15,000.
D) Green Corporation will have a basis in the land of $23,000.
E) None of the above.

Question

Quizplus · Accepted Answer

Mitchell and Powell each transfer property with a fair market value equal to their basis, so neither has a recognized gain or loss.

Mitchell and Powell Form Green Corporation