Francine incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values and tax-adjusted bases. $$\begin{array} { l r l r }
& { \text { FMV } } & & { \text { Adjusted basis } } \
\hline
\text { Inventory } & \$ 30,000 & & \$ 10,000 \
\text { Building } & 130,000 & & 80,000 \
\text { Land } & \underline { 50,000 } & & \underline { 100,000 } \
\text { Total } & \$ 210,000 & & \$ \underline { \underline { 190,000 } }
\end{array}$$ The corporation also assumed a mortgage of $60,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $150,000.
What amount of gain or loss does Francine recognize on the transfer of the property to her corporation?

Question

Francine incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values and tax-adjusted bases. $$\begin{array} { l r l r } 
& { \text { FMV } } & & { \text { Adjusted basis } } \
\hline
\text { Inventory } & \$ 30,000 & & \$ 10,000 \
\text { Building } & 130,000 & & 80,000 \
\text { Land } & \underline { 50,000 } & & \underline { 100,000 } \
\text { Total } & \$ 210,000 & & \$ \underline { \underline { 190,000 } }
\end{array}$$ The corporation also assumed a mortgage of $60,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $150,000.
What amount of gain or loss does Francine recognize on the transfer of the property to her corporation?

Quizplus · Accepted Answer

The Answer of Francine incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values and tax-adjusted bases. $$\begin{array} { l r l r } 
& { \text { FMV } } & & { \text { Adjusted basis } } \
\hline
\text { Inventory } & \$ 30,000 & & \$ 10,000 \
\text { Building } & 130,000 & & 80,000 \
\text { Land } & \underline { 50,000 } & & \underline { 100,000 } \
\text { Total } & \$ 210,000 & & \$ \underline { \underline { 190,000 } }
\end{array}$$ The corporation also assumed a mortgage of $60,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $150,000.
What amount of gain or loss does Francine recognize on the transfer of the property to her corporation?

Francine Incorporated Her Sole Proprietorship by Transferring Inventory, a Building