Donald and Melania agree to go into business together. Donald will contribute a building with a FMV of $600,000 and a tax basis of $200,000 in return for 50 percent of the stock in the corporation. The corporation will assume a $300,000 mortgage on the building. Melania will contribute $300,000 cash in return for 50% of the stock of the corporation. How much gain, if any, does Donald recognize on the transfer of his building assuming the transaction qualifies under IRC Section 351?

Donald and Melania agree to go into business together. Donald will contribute a building with a FMV of $600,000 and a tax basis of $200,000 in return for 50 percent of the stock in the corporation. The corporation will assume a $300,000 mortgage on the building. Melania will contribute $300,000 cash in return for 50% of the stock of the corporation. How much gain, if any, does Donald recognize on the transfer of his building assuming the transaction qualifies under IRC Section 351?

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter20: Corporations And Parterships

Section: Chapter Questions

Problem 28CE

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