Question

Amy transfers property with a tax basis of $1,755 and a fair market value of $1,085 to a corporation in exchange for stock with a fair market value of $630 in a transaction that qualifies for deferred under section 351. The corporation assumed a liability of $455 on the property transferred. What is Amy's tax basis in the stock received in the exchange

Answer 1

$175 is Amy's tax basis in the stock received in the exchange

Solution:

The principle of taxes of the owner is equal in the exchanged land,

when the company assumes responsibility.  

If Amy is to sell the stock at $630,

the loss is (630-455) $175,

equivalent to $175, which is the amount of a late loss.