Question 1:

Amy transfers property with a tax basis of $1,020 and a fair market value of $815 to a corporation in exchange for stock with a fair market value of $675 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $140 on the property transferred. What is Amy's tax basis in the stock received in the exchange?

Multiple Choice

A. $1,020

B. $880

C. $780

D. $675

Question 2:

Red Blossom Corporation transferred its 40 percent interest to Tea Company as part of a complete liquidation of the company. In the exchange, Red Blossom received land with a fair market value of $582,500. The corporation's basis in the Tea Company stock was $342,500. The land had a basis to Tea Company of $685,000. What amount of gain does Red Blossom recognize in the exchange and what is its basis in the land it receives?

Multiple Choice

A. $240,000 gain recognized and a basis in the land of $685,000.

B. $240,000 gain recognized and a basis in the land of $582,500.

C. No gain recognized and a basis in the land of $685,000.

D. No gain recognized and a basis in the land of $342,500.

Question 3:

Gerald received a one-third capital and profit (loss) interest in XYZ Limited Partnership (LP). In exchange for this interest, Gerald contributed a building with a FMV of $34,000. His adjusted basis in the building was $17,000. In addition, the building was encumbered with a $8,850 nonrecourse mortgage that XYZ, LP assumed at the time the property was contributed. What is Gerald's outside basis immediately after his contribution?

Multiple Choice

A. $8,150.

B. $11,100.

C. $25,150.

D. $25,850.