Carl and Ben form Eagle Corporation. Carl transfers cash of $50,000 for 50 shares of stock of Eagle. Ben transfers proprietary information with a tax basis of zero and a fair market value of $50,000 for the remaining 50 shares in Eagle. Carl will have a tax basis of $50,000 in his stock in Eagle Corporation and Ben's basis in his stock will be zero.

Question

Quizplus · Accepted Answer

Carl's tax basis in the stock is the amount of cash he contributed, $50,000. Ben's basis in the stock is the same as the tax basis of the property he transferred, which is zero.

Carl and Ben Form Eagle Corporation