Feld, the sole stockholder of Maki Corp., paid $50,000 for Maki's stock in 2010. In 2019, Feld contributed a parcel of land to Maki but was not given any additional stock for this contribution. Feld's basis for the land was $10,000, and its fair market value was $18,000 on the date of the transfer of title. What is Feld's adjusted basis for the Maki stock? A. $50,000B. $52,000C. $60,000D. $68,000

Question

Selina

Business

18 October, 10:27

Feld, the sole stockholder of Maki Corp., paid $50,000 for Maki's stock in 2010. In 2019, Feld contributed a parcel of land to Maki but was not given any additional stock for this contribution. Feld's basis for the land was $10,000, and its fair market value was $18,000 on the date of the transfer of title. What is Feld's adjusted basis for the Maki stock? A. $50,000B. $52,000C. $60,000D. $68,000

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Answers (1)

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Demarcus Mathis · Answer 1

Option C is correct. ($60000)

Feld's adjusted basis for the Maki stock = $60,000

Explanation:

Option C is correct. ($60000)

On contribution of parcel of land, Feld would not receive any additional stock in the corporation rather it will increase the adjusted basis of shareholder (Feld) not by the fair market value but by the basis for the land contributed. So, Feld is going to have no gain in this case.

Feld pays $50000 for Maki's stock

Feld's basis for the land was $10,000

Feld's adjusted basis for the Maki stock = Amount paid for Maki stock + Basis for land

Feld's adjusted basis for the Maki stock = $50000+$10000

Feld's adjusted basis for the Maki stock = $60,000