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:

NATO Forces

Military forces from member countries of the North Atlantic Treaty Organization, an intergovernmental military alliance between North American and European countries established in 1949 for mutual defense.

Aerial Bombardment

Military strategy involving dropping bombs from aircraft onto ground targets, often used in warfare to damage infrastructure and enemy forces.

Kyoto Protocol

An international treaty that commits state parties to reduce greenhouse gas emissions, based on the scientific consensus that global warming is occurring and that human-made CO2 emissions are a significant cause.

Carbon Dioxide Emissions

The release of CO2 into the atmosphere, primarily from burning fossil fuels (coal, oil, and gas) for energy and transportation, contributing to global warming and climate change.