Inez transfers property with a tax basis of $200 and a fair market value of $300 to a corporation in exchange for stock with a fair market value of $250 in a transaction that qualifies for deferral under section 351.The corporation assumed a liability of $50 on the property transferred.What is the corporation's tax basis in the property received in the exchange?
A)$150.
B)$200.
C)$250.
D)$300.

Question

Quizplus · Accepted Answer

Under section 358(a), the corporation's tax basis in the property received in a section 351 exchange is the same as the transferor's tax basis immediately before the transfer. Since Inez's tax basis in the property was $200, this is also the corporation's tax basis, regardless of any liabilities assumed by the corporation.

Inez Transfers Property with a Tax Basis of $200 and a Fair