Casey transfers property with a tax basis of $2,000 and a fair market value of $5,000 to a corporation in exchange for stock with a fair market value of $4,000 and $400 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $600 on the property transferred. Casey also incurred selling expenses of $300. What is the amount realized by Casey in the exchange?
A)$5,000
B)$4,700
C)$4,600
D)$4,200

Question

Quizplus · Accepted Answer

The amount realized by Casey in the exchange is the fair market value of the stock received ($4,000) plus cash received ($400), totaling $4,400. The assumption of liability ($600) is also considered part of the amount realized, bringing the total to $5,000. However, selling expenses of $300 reduce this amount, resulting in a final amount realized of $4,700.

Casey Transfers Property with a Tax Basis of $2,000 and a Fair