Question

An individual contributes two properties to a corporation in a 351 exchange. The first property has a basis of $50000, and fair market value of $70000. The second property has a basis of $80000, and fair market value of $85000. The second property is subject to a mortgage of $40000. The individual's stock basis after the transfer is:

A.130000

B. 120000

C. 155000

D. 90000

Answer 1

Answers Page No ③ Tondividual stock bar is alter the transfer If all the contributors of cash plus property have 80%. Ox more control the issuance of stock in exchange for property is a non Gaxable transachion under 351 Scchion. Individual rock basis after the transfer = first property basis share holders basis for stock = fir et properly basis + (Canyover basis :.- morigage debt) - 50,000 + ( 80,000 – 40,000) - 50,000 + 40000 $ 90,000 2. Individual stock basis after the transfer - $90,000 Li Option is correct answer.