Brett transfers to Teakwood Co. property having a $34,000 adjusted basis and a $56,000 FMV in exchange for all of Teakwood's stock worth $18,000 and Teakwood's assumption of a $38,000 mortgage on the property.

Requirements

1. What is the amount of Brett's recognized gain or loss?

2. What is Brett's basis in the Teakwood stock?

3. What is Teakwood's basis in the property?

4. How would you answers to Parts a through c change if the mortgage assumed by Teakwood were $18,000 and the Teakwood stock were worth $38,000?

a.What is the amount of Brett's recognized gain or loss?

b.What is Brett's basis in the Teakwood stock?

c.What is Teakwood's basis in the property?