Felix transfers land with a FMV of $900,000 to a newly formed corporation in exchange for all of the stock.The land has a basis of $300,000 and debt of $500,000.The basis of the land,in the hands of the corporation is:

Question

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When Felix transfers the land with a FMV of $900,000 to the newly formed corporation in exchange for all of the stock, the corporation takes over the basis of the land, which is $300,000. However, the corporation also takes over the debt of $500,000, which increases the basis to $800,000. Therefore, the basis of the land in the hands of the corporation is $800,000, which is option B.

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