Baxter Corporation Transfers Assets with an Adjusted Basis of $300,000

question 64

Essay

Baxter Corporation transfers assets with an adjusted basis of $300,000 and an FMV of $500,000 to Duke Corporation for 90% of Duke's single class of stock worth $500,000. The Duke stock is then exchanged for Frank's 50% interest in Baxter Corporation. Frank's basis in the Baxter stock he surrenders is $120,000. What is Duke Corporation's basis in the assets it receives?

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Definitions:

Average

A statistical measure representing the central or typical value in a set of data, calculated by dividing the sum of all values by the number of values.

Sum

The result of adding two or more numbers or quantities together, totaling their combined value.

Min Function

A computing function that returns the smallest value in a given set of numbers or arguments.

Page Layout View

A display mode in word processors and spreadsheet applications that shows the document as it would appear when printed.