In 2006, Gita Contributed Property with a Basis of $500,000

question 2061

Essay

In 2006, Gita contributed property with a basis of $500,000 and a fair market value of $3,000,000 to a qualified sm business corporation for all of its common stock. She sells the stock in 2018 for $4,000,000.
a. What is the amount of taxable gain on the transaction?
b. Assume instead that the stock was acquired in December 2010. What is the amount of the taxable gain?

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Definitions:

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