Carlos transfers property with a tax basis of $500 and a fair market value of $800 to a corporation in exchange for stock with a fair market value of $650 and $50 in cash in a transaction that qualifies for deferral under section 351. the corporation assumed a liability of $100 on the property transferred. what is the corporation's tax basis in the property received in the exchange? a. $800 b. $600 c. $550 d. $450

c. $550

Explanation:

Property has transfered by Carlos, and at the time of Transfer Carlos basis on the Property is $500.

So, from "Carryover basis" rule:

Corporation Tax basis on Property is = Basis of Carlos + Gain recognised.

                                                              = $500 + $50

                                                              = $550.

Therefore, The corporation's tax basis in the property received in the exchange is $550

you have to put the parentheses like this:

in fact, you have to perform the operation inside parentheses first, and then proceed in order:

the answer is a.

by: nicholas dooley