Casey transfers property with a tax basis of $2,500 and a fair market value of $6,900 to a corporation in exchange for stock with a fair market value of $5,300 and $700 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $900 on the property transferred. Casey also incurred selling expenses of $316. What is the amount realized by Casey in the exchange?

Question

Quizplus · Accepted Answer

The amount realized by Casey is the fair market value of the stock plus the cash received, minus any selling expenses. Therefore, the amount realized is $5,300 + $700 - $316 = $5,684. However, since the transaction qualifies for deferral under section 351, Casey does not recognize any gain or loss on the transfer at this time.

Casey Transfers Property with a Tax Basis of $2,500 and a Fair