A shareholder contributes land to his wholly owned corporation but receives no stock in return. The corporation has a zero basis in the land.

Question

Quizplus · Accepted Answer

When a shareholder contributes property (such as land) to a corporation in exchange for stock, the corporation's basis in the property is generally the same as the shareholder's adjusted basis, just before the contribution. This rule applies even if the shareholder owns 100% of the corporation.

A Shareholder Contributes Land to His Wholly Owned Corporation but Receives