N established L Corporation by transferring property worth $100,000 (basis $25,000) to the corporation for all of its stock.N's basis in the stock received is the same as the corporation's basis for the property, $25,000.

Question

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According to the section 351 of the Internal Revenue Code, when property is transferred to a corporation in exchange for its stock, the transferor's basis in the stocks received is the same as the corporation's basis in the transferred property. Thus, N's basis in the stock received is $25,000, which is the corporation's basis for the property transferred.

N Established L Corporation by Transferring Property Worth $100,000 (Basis