Antoine transfers property with a tax basis of $505 and a fair market value of $635 to a corporation in exchange for stock with a fair market value of $610 in a transaction that qualifies for deferral under section 351

Accounting Jan 16, 2021

Antoine transfers property with a tax basis of $505 and a fair market value of $635 to a corporation in exchange for stock with a fair market value of $610 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $25 on the property transferred. What is Antoine's tax basis in the stock received in the exchange?

Multiple Choice

$635
$610
$505
$480

Expert Solution

Correct option = (D)

Explaination=

Tax basis = $505 - $25

=$480

Tax basis will be adjusted basis of asset exchanged and decreased by liability which is assumed by transferee.

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