Antoine transfers property with a tax basis of $525 and a fair market value of $754 to a corporation in exchange for stock with a fair market value of $649 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $105 on the property transferred. What is Antoine's tax basis in the stock received in the exchange?
A)$754
B)$649
C)$525
D)$420

Question

Quizplus · Accepted Answer

Antoine's tax basis in the stock received in the exchange is equal to the tax basis of the property transferred reduced by any liabilities assumed by the corporation. Therefore, Antoine's tax basis in the stock received is $525 - $105 = $420.

Antoine Transfers Property with a Tax Basis of $525 and a Fair