Amos Contributes Land with an Adjusted Basis of $150,000 and a Fair

question 43

True/False

Amos contributes land with an adjusted basis of $150,000 and a fair market value of $200,000 to White, Inc., an S corporation, in exchange for 50% of the stock of White, Inc. Carol contributes cash of $200,000 for the other 50% of the stock. If White later sells the land for $225,000, $62,500 [$50,000 + 50%($25,000)] is allocated to Amos and $12,500 ($25,000 × 50%) is allocated to Carol.

---

Definitions:

Consideration

A fundamental concept in contract law, referring to something of value that is exchanged between parties as part of an agreement.

Gratuitous Promise

A promise for which no consideration is given and which is not legally binding.

Conditional

Something that is subject to one or more conditions or requirements being met before it becomes fully effective or binding.

Future Events

Events or occurrences that have not yet happened but are expected or predicted to happen in the future.