John transfers a property (A/B $10,000, FMV $50,000) to Brown Corp. in exchange for 100% of the Brown stock, which is worth $50,000. The property is subject to a liability of $20,000, which Brown assumes. The transfer is for business purpose. The $20,000 liability is also for business purpose. What is John’s recognized gain? What is John’s stock basis in the Brown corporation What is Brown’s basis in the property?
John transfers a property (A/B $10,000, FMV $50,000) to Brown Corp. in exchange for 100% of the Brown stock, which is worth $50,000. The property is subject to a liability of $20,000, which Brown assumes. The transfer is for business purpose. The $20,000 liability is also for business purpose. What is John’s recognized gain? What is John’s stock basis in the Brown corporation What is Brown’s basis in the property?
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter12: Corporations: Organization, Capital Structure, And Operating Rules
Section: Chapter Questions
Problem 22P
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John transfers a property (A/B $10,000, FMV $50,000) to Brown Corp. in exchange for 100% of the Brown stock, which is worth $50,000. The property is subject to a liability of $20,000, which Brown assumes. The transfer is for business purpose. The $20,000 liability is also for business purpose.
- What is John’s recognized gain?
- What is John’s stock basis in the Brown corporation
- What is Brown’s basis in the property?
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