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13 Dec 2019

property with a fair market value of $300,000, a basis of $100,000, and liabilities of $75,000 is transferred to a corporation in a section 351 exchange. The transfer of the liabilities was for improper business motives. how much gain must be recognized by the transferor?

a. $50,000

b. $75,000

c. 100,000

d. 200,000

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Lelia Lubowitz
Lelia LubowitzLv2
17 Dec 2019
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Related questions

Zhang incorporated her sole proprietorship by transferringinventory, a building, and land to the corporation in return for100 percent of the corporation’s stock. The property transferred tothe corporation had the following fair market values and taxbases:

FMV Tax Basis

Inventory $ 20,000 $ 10,000

Building 150,000 100,000

Land 230,000 70,000

Total $ 400,000 $ 180,000

The corporation also assumed a mortgage of $200,000 attached tothe building and land. The fair market value of the corporation’sstock received in the exchange was $220,000. The exchange met therequirements to be tax-deferred under §351.

. What amount of gain does Zhangrecognize on the transfer of the property to hercorporation?

1.) Henrietta exchanged real property held for investment with abasis of $100,000 and a fair market value of $125,000 for otherreal property with a fair market value of $160,000 owned by Harrythat Henrietta planned to hold for investment. She also transferredto Harry 100 shares of Piano, Inc. stock worth $25,000 with anadjusted basis of $15,000. Harry’s basis in his property was$200,000.

a.)How much is Henrietta’s realized gain andher recognized gain?

b.)How much gain or loss is recognized byHarry?

1. Bob owned a duplex used as rental property. The duplex had an adjusted basis to Bob of $86,000 and a fair market value of $300,000. Bob transferred the duplex to his brother, Carl, in exchange for a triplex that Carl owned. The triplex had an adjusted basis to Carl of $279,000 and a fair market value of $300,000. Two months after the exchange, Carl sold the duplex to his business associate to whom he was not related for $312,000. How much, if any, gain or loss did Carl recognize with respect to the sale by Carl two months after the transaction with Bob?
a. No gain or loss was recognized.
b. $11,000 gain was recognized.
c. $12,000 gain was recognized.
d. None of the above.

2. Assume the same facts as in Question 37, except that Carl sold the duplex to the business associate more than two years after the exchange with Bob. Without taking into consideration any changes to the adjusted basis of the property subsequent to the exchange with Bob (such as for depreciation), how much, if any, gain or loss did Bob recognize with respect to the exchange with Carl?

a. No gain or loss was recognized.
b. $11,000 gain was recognized.
c. $214,000 gain was recognized.
d. The transfer by Bob to Carl is a gift.
e. $21,000.

3. Under the facts of Question 37, what is Bob’s basis in the triplex?
a. $86,000.
b. $279,000.
c. $300,000.
d. $312,000.

4. Assume the same facts as Question 37, except that Carl sold the duplex to his business associate more than two years after the exchange with Bob. Without taking into consideration any changes to the adjusted basis of the property subsequent to the exchange with Bob (such as for depreciation), how much, if any, is Carl’s recognized gain with respect to these transactions?

a. No gain or loss on the exchange with Bob, and $12,000 gain on the subsequent sale.
b. $11,000 gain on the exchange with Bob, and $12,000 gain on the subsequent sale.
c. $12,000 gain on the exchange with Bob, and $279,000 on the subsequent sale.
d. None of the above.

please explain answer. tk

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