Question
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
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 | $ | 68,000 | $ | 34,000 | |
| Building | 510,000 | 340,000 | |||
| Land | 782,000 | 1,020,000 | |||
| Total | $ | 1,360,000 | $ | 1,394,000 | |
|
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The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the corporations stock received in the exchange was $1,260,000. The transaction met the requirements to be tax-deferred under 351.
d. What is the corporations adjusted basis in each of the assets received in the exchange?
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Auditing And Assurance Services
Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan
16th Global Edition
1292147989, 978-1292147987
