Roy transfers property with a tax basis of $800 and a fair market value of $500 to a corporation in exchange for stock with a fair market value of $400 and $50 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $50 on the property transferred. What is Roy's tax basis in the stock received in the exchange?

Question

Quizplus · Accepted Answer

Under section 351, the basis of the stock received is the basis of the property transferred ($800) minus the liabilities assumed by the corporation ($50) minus the cash received ($50), resulting in a basis of $700.

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