Question

As part of a good Section 351 transaction Andy contributes his business with a basis of $200,000 in exchange for $300,000 worth of stock and $50,000 of cash. What gain does Andy recognize?

Answer 1

Gain = $150,000

Step-by-step explanation:

Given:

Contribution = $200,000

Exchange stock = $300,000

Cash = $50,000

Find:

Gain

Computation:

Gain = Exchange stock + Cash - Contribution

Gain = $300,000 + $50,000 - $200,000

Gain = $150,000