Question
Amelia, a Cash Basis Taxpayer, incorporates her Sole Proprietorship in 2019. She transfers the following items to the newly created Leggett Corporation: Cash-$40,000 (Adjusted Basis);
Amelia, a Cash Basis Taxpayer, incorporates her Sole Proprietorship in 2019. She transfers the following items to the newly created Leggett Corporation: Cash-$40,000 (Adjusted Basis); $40,000 (Fair Market Value); Land- $280,000(Adjusted Basis); $280,000 (Fair Market Value); Mortgage Payable- $330,000 (Adjusted Basis); $330,000 (Fair Market Value). Amelia received only stock for the transfer of the assets to the newly created corporation. Which of the following is correct regarding the transfer?
- Amelia has Recognized Gain of $10,000
- Leggett Corporations basis in the Land is $280,000
- Amelia has no Recognized Gain or Recognized Loss
- Amelia has Recognized Gain of $50,000
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GAO Financial Audit Manual Volume 3 June 2018
Authors: United States Government GAO
2018 Edition
979-8733166001
