Tristan transfers property with a tax basis of $920 and a fair market value of $1,600 to a corporation in exchange for stock with a fair market value of $920 and $426 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $254 on the property transferred. What is the corporation's tax basis in the property received in the exchange?

Question

Quizplus · Accepted Answer

The corporation's tax basis in the property received in the exchange is equal to the sum of the tax basis of the property transferred plus any liabilities assumed by the corporation, which is $920 + $254 = $1,174. The fair market value of the stock and cash received is not relevant for determining the corporation's tax basis in the property received.

Tristan Transfers Property with a Tax Basis of $920 and a Fair