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6 March, 16:27

Roy transfers property with a tax basis of $800 and a fair market value of $500 to a corporation in exchange for stock with a fair market value of $400 and $50 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $50 on the property transferred. What is Roy's tax basis in the stock received in the exchange?

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  1. 6 March, 19:47
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    Roy's tax basis in the stock received = $700

    Explanation:

    given data

    transfers property = $800

    fair market value = $500

    fair market value = $400

    Liability assumed = $50

    Boot received = $50

    to find out

    tax basis in the stock received in the exchange

    solution

    we get here Roy's tax basis in the stock received that is express as

    Roy's tax basis in the stock received = transfers property - Liability assumed - Boot received ... 1

    put here value we get

    Roy's tax basis in the stock received = $800 - $50 - $50

    Roy's tax basis in the stock received = $700
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