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

question 38

Multiple Choice

Roy transfers property with a tax basis of $800 and a fair market value of $500 to a corporation in exchange for stock with a fair market value of $400 and $50 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $50 on the property transferred. What is Roy's tax basis in the stock received in the exchange?

• A) $800
• B) $750
• C) $700
• D) $500

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Definitions:

Managed Float

A currency exchange rate policy that allows a country's currency value to fluctuate in response to the foreign exchange market, but with central bank interventions to stabilize it when necessary.

Exchange Rate System

The mechanism by which a country manages its currency in relation to other currencies, involving policies on currency valuation, exchange regimes, and market conditions.

Central Banks

Institutions that manage a country's currency, money supply, and interest rates. They oversee the commercial banking system of their respective countries.

Imports

Goods and services brought into one country from another for sale, which can impact a nation’s economy by influencing the balance of trade.