Roy transfers property with a tax basis of $800 and a fair market value of $500 to a corporation in exchange for stock with a fair market value of $400 and $50 in cash in a transaction that qualifies for deferral under §351. The corporation assumed a liability of $50 on the property transferred. What is Roy's tax basis in the stock received in the exchange?
A)$800
B)$750
C)$700
D)$500

Question

Quizplus · Accepted Answer

Roy's tax basis in the stock received is calculated by starting with the original basis of the property transferred ($800), then subtracting the cash received ($50), and also subtracting the liability assumed by the corporation ($50), resulting in a new basis of $700.

Roy Transfers Property with a Tax Basis of $800 and a Fair