Question
Martha receives 40 shares of L Corporation Stock with a fair value of $540,000 plus $60,000 cash in exchange for his transfer of inventory, a
Martha receives 40 shares of L Corporation Stock with a fair value of $540,000 plus $60,000 cash in exchange for his transfer of inventory, a building, and land to L Corporation. Assume the rules of 351 were met, and all property is free of liabilities. The property transferred to the corporation had the following fair market value and adjusted bases:
|
| FMV | Adjusted Basis | Gain Realized |
| Inventory | $70,000 | $65,000 | $5,000 |
| Building | $380,000 | $330,000 | $50,000 |
| Land | $150,000 | $105,000 | $45,000 |
| Total | $600,000 | $500,000 | $100,000 |
1. What is Marthas recognized gain on this transfer?
2. What is Marthas adjusted tax basis in the Cougar Stock after the transfer? Show your calculations!
3. What is Marthas adjusted tax basis in the land after the transfer?
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