Camilla and Dean form Grouse Corporation with the following investment: From Camilla From Dean
Cash $300,000
Property (basis of $320,000;fair market value of $330,000
$330,000)
Camilla and Dean each receive 300 shares of stock in Grouse Corporation and,in addition,Dean receives $30,000 in cash.As a result of the transfer,Dean's basis in the stock and Grouse's basis in the property will be:

Question

Quizplus · Accepted Answer

Dean's basis in the stock is $320,000 (basis of property given up)- $30,000 (boot received)+ $10,000 (gain recognized)= $300,000.Of the $30,000 boot received,only $10,000 is recognized,as recognized gain cannot exceed realized gain.Grouse's basis in the property is $320,000 (Dean's basis)+ $10,000 (Dean's recognized gain)= $330,000.

Camilla and Dean Form Grouse Corporation with the Following Investment