Jane transfers property (basis of $180,000 and fair market value of $500,000) to Green Corporation for 80% of its stock (worth $425,000) and a long-term note (worth $75,000), executed by Green Corporation and made payable to Jane. As a result of the transfer:
A) Jane recognizes no gain.
B) Jane recognizes a gain of $75,000.
C) Jane recognizes a gain of $270,000.
D) Jane recognizes a gain of $320,000.
E) None of the above.

Question

Quizplus · Accepted Answer

Jane recognizes a gain to the extent of the boot received, which is the long-term note worth $75,000.

Jane Transfers Property (Basis of $180,000 and Fair Market Value