Question

Jocelyn contributes land with a basis of $60,500 and fair market value of $90,750 and inventory with a basis of $22,600 and fair market value of $33,900 in exchange for 100% of Zion Corporation stock. The land is subject to a $15,125 mortgage.

If an amount is zero, enter "0"


The exchange Selectisis notItem 1 tax-free under § 351 because the release of a liability Selectisis not Item 2 treated as boot under § 357(a). As a result, Jocelyn has income of $_______ and a basis $ __________ in her stock.

Answer 1

$0

$50,000

Step-by-step explanation:

Jocelyn contributes land of basis $60,500 and fair value of $90,000. The land was subject to mortgage of $15,125. The transfer of mortgage property to a controlled corporation will result in gain to the property transferor. The income to Jocelyn is zero and a basis of the Zion Corporation stock will be $50,000.