Question

Albert transfers land (basis of 140,000 and fair market value of 320,000) to Gold Corporation for 80. What is the basis in the land for Gold Corporation?

1) 220,000
2) 140,000
3) 60,000
4) 80,000
5) None of these choices are correct.

Answer 1

Gold Corporation's basis in the land would be the same as Albert's adjusted basis, which is $140,000, plus any amount paid ($80), thus the basis is $140,000 for the corporation.

Step-by-step explanation:

The question appears to be concerned with determining the basis of the land for tax purposes after Albert transfers it to Gold Corporation for a certain amount. In accounting and tax, the basis is generally the amount invested in a property for tax purposes. When property is acquired by a corporation from a shareholder as part of a transaction, the corporation's basis in the property is generally the same as the shareholder's (transferor's) adjusted basis, plus any money the corporation paid to the shareholder for the property.

Here, Albert has an adjusted basis of $140,000 in the land and transfers it for $80. Therefore, the correct basis in the land for Gold Corporation would be the shareholder's adjusted basis in the land. The fair market value of the land is irrelevant to this determination unless certain other tax provisions apply, which are not mentioned in the question.