Final answer:
Riley Corp.'s basis in the property that was transferred by Tracy would be $50,000, which is Tracy's adjusted basis in the property prior to the transfer.
Step-by-step explanation:
When Tracy transfers property with a value of $60,000 and an adjusted basis of $50,000 to form Riley Corp. in exchange for corporate stock, the tax basis of the property in the hands of the corporation is generally the same as the transferred property's basis in the hands of the transferor. This rule is according to Internal Revenue Code Section 362(a), which states that if the property was acquired by a corporation in connection with a transaction to which Section 351 applies, the basis shall be the same as it would be in the hands of the transferor, increased by the amount of any gain recognized to the transferor on such transfer.
Since the transfer qualifies under Section 351 (whereby no gain or loss is recognized if property is transferred to a corporation by one or more persons solely in exchange for stock in such corporation), Riley Corp.'s basis in the property will be the same as Tracy's adjusted basis, which is $50,000, assuming it is Section 1231 property which is typically used in trade or business and can be depreciable or real property.