If a corporation's total adjusted bases for all properties transferred exceed the total FMV of the properties, the corporation's bases in the property is limited to FMV if no election is made.

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This is known as the "basis limitation" rule under Section 362(e)(2) of the Internal Revenue Code. If the total adjusted bases of all properties transferred exceed the total fair market value (FMV) of the properties, the corporation's bases in the properties will be limited to FMV unless the corporation makes an election to reduce the bases by the excess amount.

If a Corporation's Total Adjusted Bases for All Properties Transferred