Amy transfers property with a tax basis of $1,180 and a fair market value of $1,035 to a corporation in exchange for stock with a fair market value of $920 in a transaction that qualifies for deferral under section 351

Accounting Jan 16, 2021

Amy transfers property with a tax basis of $1,180 and a fair market value of $1,035 to a corporation in exchange for stock with a fair market value of $920 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $115 on the property transferred. What is Amy's tax basis in the stock received in the exchange?

Multiple Choice

$1,180
$1,065
$965
$920

Expert Solution

SOLUTION: Option B is the correct answer of this question.

Property Transfered Tax Basis $ 1180

Less: Liability assumed by the corporation $ 115

Amy's tax basis in the stock received in the exchange $ 1065

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