Janice Transfers Land and a Building with a $180,000 Adjusted

question 50

Essay

Janice transfers land and a building with a $180,000 adjusted basis and a $200,000 FMV to Optimum Corporation in exchange for 100% of its stock in a transaction qualifying under Sec.351.Shortly before the transfer,Janice obtains a $140,000 mortgage on the property and uses the funds to pay off personal debts.The corporation then assumes the $140,000 mortgage and issues stock worth $60,000.The mortgage assumption lacks business purpose and is intended to place cash in Janice's hands.
a.What is the gain realized by Janice?
b.What is the gain recognized by Janice?
c.What is the basis of the stock received by Janice?
d.What is Optimum's basis in the land and building?

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Definitions:

Permissive

A parental approach that features minimal expectations paired with a high level of attentiveness.

Effective Punishment

A disciplinary measure that is immediate, consistent, and proportionate to the behavior, leading to the desired change in behavior.

Consistent

Characterized by conformity to the same principles or course of action over time.

Immediate

Occurring or done at once; instant.