Question

Tristan transfers property with a tax basis of $900 and a fair market value of $1,200 to a corporation in exchange for stock with a fair market value of $900 and $200 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $100 on the property transferred. What is the corporation's tax basis in the property received in the exchange?
A. $1,200

B. $1,100

C. $1,000

D. $900

Answer 1

Answer:

Option B is correct.

Corporation tax basis in the property received= $1,100

Explanation:

Option B is correct.

Corporation tax basis in the property received is calculated by adding the tristan transfers property with a tax basis of $900 and $200 which is the profit/gain tristan got.

Corporation tax basis in the property received=tristan transfers property with a tax basis + Gain Received

Corporation tax basis in the property received= $900 + $200

Corporation tax basis in the property received= $1,100