1) What is the corporations basis in the unrealized account reveiveable transferred from Tina?

2) What is the amount of net assets transferred?

Tina, a cash basis taxpayer, incorporates her sole proprietorship. In return for all of the stock of the new corporation, she transfers the following items: Because uncollected accounts receivable and unpaid trade accounts payable have a zero basis for cash basis taxpayers, they recognize no income until they collect the receivables and no deduction until they pay the accounts payable. In contrast, the note payable has a basis because it was issued for cash or other consideration. In this situation, Tina disregards the accounts payable for determining her recognized gain and for determining her stock basis. Thus, for purposes of $357 (c), because the balance of the note payable does not exceed the basis of the assets transferred, Tina does not face the situation of liabilities in excess of basis (i.e., the note payable of $5,000 does not exceed the aggregate basis in the cash and accounts receivable of $10,000 )