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1 November, 11:53

Antoine transfers property with a tax basis of $500 and a fair market value of $600 to a corporation in exchange for stock with a fair market value of $550 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $50 on the property transferred. What is Antoine's tax basis in the stock received in the exchange?

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  1. 1 November, 12:09
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    Antoine's tax basis in the stock received in the exchange is $450

    Explanation:

    Antoine's tax basis in the stock received in the exchange will be

    Tax basis = Tax basis - Liability

    = 500 - 50

    = $450

    Tax basis will be adjusted basis of asset exchanged and decreased by liability assumed by trans-free.
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