Rachelle Transfers Property with a Tax Basis of $800 and a Fair

question 67

Multiple Choice

Rachelle transfers property with a tax basis of $800 and a fair market value of $900 to a corporation in exchange for stock with a fair market value of $750 and $50 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $100 on the property transferred. What is the corporation's tax basis in the property received in the exchange?

• A)$900
• B)$850
• C)$800
• D)$750

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Definitions:

Fertilization

The process of a sperm cell uniting with an egg cell to form a zygote, initiating embryonic development.

Zygote

The initial cell formed when a sperm cell fertilizes an egg cell, representing the earliest stage of embryonic development.

Secondary Oocyte

A cell that originates from the division of an oocyte during meiosis, capable of being fertilized or developing further upon fertilization.

Fertilization

The process by which a sperm cell unites with an egg cell, leading to the formation of a zygote that can develop into a new organism.