Roy transfers property with a tax basis of $800 and a fair market value of $500 to a corporation in exchange for stock with a fair market value of $400 and $50 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $50 on the property transferred. What is Roy's tax basis in the stock received in the exchange?

Question

Kelsey

Business

23 March, 04:28

Roy transfers property with a tax basis of $800 and a fair market value of $500 to a corporation in exchange for stock with a fair market value of $400 and $50 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $50 on the property transferred. What is Roy's tax basis in the stock received in the exchange?

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Answers (1)

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Hannah Phillips · Answer 1

Roy's tax basis in the stock received = $700

Explanation:

given data

transfers property = $800

fair market value = $500

fair market value = $400

Liability assumed = $50

Boot received = $50

to find out

tax basis in the stock received in the exchange

solution

we get here Roy's tax basis in the stock received that is express as

Roy's tax basis in the stock received = transfers property - Liability assumed - Boot received ... 1

put here value we get

Roy's tax basis in the stock received = $800 - $50 - $50

Roy's tax basis in the stock received = $700