Question

When depreciable property is transferred to a corporation in exchange for stock in a tax-deferred Section 351 transaction, the depreciable basis of the property to the corporation is_______

Answer 1

When property is transferred to a corporation in a tax-deferred Section 351 transaction, the depreciable basis of the property to the corporation is the same as the basis of the property in the hands of the transferor.

Step-by-step explanation:

When depreciable property is transferred to a corporation in exchange for stock in a tax-deferred Section 351 transaction, the depreciable basis of the property to the corporation is the same as the basis of the property in the hands of the transferor. The basis represents the original cost of the property and any adjustments made for depreciation deductions taken over time.