Basira transfers land with a FMV of $900,000 to a newly formed corporation in exchange for all the stock.The land has a basis of $500,000 and debt of $300,000.Basira's taxable gain from this transaction is:

Question

Quizplus · Accepted Answer

Basira's taxable gain is $0 because under Section 351 of the Internal Revenue Code, no gain or loss is recognized if property is transferred to a corporation by one or more persons solely in exchange for stock in such corporation, and immediately after the exchange, such person or persons are in control (meaning ownership of at least 80% of both the stock and voting power) of the corporation. In this case, Basira transfers land to the corporation in exchange for all of its stock, meeting these conditions. The debt relief of $300,000 is not considered taxable gain in this context.

Basira Transfers Land with a FMV of $900,000 to a Newly