Rachelle transfers property with a tax basis of $800 and a fair market value of $900 to a corporation in exchange for stock with a fair market value of $750 and $50 in cash in a transaction that qualifies for deferral under §351. The corporation assumed a liability of $100 on the property transferred. What is Rachelle's tax basis in the stock received in the exchange?
A)$900
B)$850
C)$750
D)$700

Question

Quizplus · Accepted Answer

Rachelle's tax basis in the stock is calculated as the original basis of the property transferred ($800) minus the cash received ($50) and the liability assumed by the corporation ($100), resulting in a basis of $700.

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