Eve receives stock and a long-term note as consideration for the property transferred. The basis of the stock received is $350,000, and the basis of the long-term note received is $50,000.
In this scenario, Eve transfers property with a basis of $120,000 and worth $400,000 to Green Corporation for 80% of its stock worth $350,000 and a long-term note worth $50,000 executed by Green Corporation and made payable to Eve.
The result of this transfer is that Eve receives stock and a long-term note as consideration for the property transferred. The basis of the stock received is $350,000 (the fair market value of the stock received), and the basis of the long-term note received is $50,000.