A transfers land to Newco in exchange for 100% of Newcos stock. The land has a basis of $50, FMV of $100 and is subject to a mortgage of $40.

A) What are the consequences to each of the parties?

B) Suppose in that the mortgage was placed on the property immediately before the transfer to Newco. A wanted cash in order to buy a yacht to be used for personal purposes, so he took out a mortgage on the land. Would this change your answer

C) Suppose instead that the mortgage was for $60. Suppose further that this mortgage was incurred on the purchase of the property many years ago. Would this change your answer?

D) Same as (c) except that A also transfers accounts payable of $10. A is a cash basis taxpayer. How would this change your answer?