Rosa, the sole shareholder of Robin Corporation, contributes land (basis of $40,000 and fair market value of $100,000) to the corporation but does not receive additional stock. Neither Rosa nor Robin Corporation will have to recognize gain as a result of this transfer.

Question

Quizplus · Accepted Answer

When a shareholder contributes property to a corporation in exchange for stock, the transaction may be subject to gain or loss recognition. However, in this scenario, Rosa is not receiving additional stock for her contribution of land to Robin Corporation. As a result, neither Rosa nor Robin Corporation will have to recognize gain on the transfer.

Rosa, the Sole Shareholder of Robin Corporation, Contributes Land (Basis