Determine the Basis of Stock in the Hands of the Shareholder,the

question 107

Essay

Determine the basis of stock in the hands of the shareholder,the basis to the corporation of the contributed property,and the gain,if any,to the shareholder in each of the following independent cases.In all cases,assume that the 80% test is met.
a.Pierre contributes a vehicle with a FMV of $6,000 and basis of $8,000.
b.Marcus contributes land with a FMV of $500,000,basis of $300,000,and debt of $250,000.
c.Same as b.except Marcus also receives cash of $25,000.
d.Patricia contributes an apartment building with a FMV of $200,000,basis of $50,000,and debt of $125,000.

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Definitions:

Economic Growth

An increase in the production of goods and services in an economy over a period of time, usually measured by the rise in GDP.

Federal Budget Deficit

A situation where the federal government's expenditures exceed its revenues within a given fiscal year.

Paradox of Thrift

If everyone tries to save more, they will all end up saving less.

Consumption

The use of goods and services by households, which is a key component in calculating a country's Gross Domestic Product (GDP).