Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporations stock. The property transferred to the corporation had the following fair market values and adjusted bases:

FMV Adjusted Basis

Inventory $67,200 $33,600

Building 120,000 75,000

Land 199,400 263,000

Total $386,600 $371,600

The corporation also assumed a mortgage of $96,000 attached to the building and land. The fair market value of the corporations stock received in the exchange was $290,600. The transaction met the requirements to be tax-deferred under 351.

a. What amount of gain or loss does Zhang realize on the transfer of the property to her corporation?

b. What amount of gain or loss does Zhang recognize on the transfer of the property to her corporation?

c. What is Zhangs tax basis in the stock she receives in the exchange?

d. What is the corporations adjusted basis in each of the assets received in the exchange?

Adjusted basis

Inventory Building Land

e. Assume the corporation assumed a mortgage of $381,400 attached to the building and land. Assume the fair market value of the building is now $201,600 and the fair market value of the land is $537,600. The fair market value of the stock remains $290,600. How much, if any, gain or loss does Zhang recognize on the exchange assuming the revised facts?

f. Assume the corporation assumed a mortgage of $381,400 attached to the building and land. Assume the fair market value of the building is now $201,600 and the fair market value of the land is $537,600. The fair market value of the stock remains $290,600.

What is Zhangs tax basis in the stock she receives in the exchange?

g. Assume the corporation assumed a mortgage of $381,400 attached to the building and land. Assume the fair market value of the building is now $201,600 and the fair market value of the land is $537,600. The fair market value of the stock remains $290,600.

What is the corporations adjusted basis in each of the assets received in the exchange?

adjusted basis

inventory building land