Ashley Transfers Property with a Tax Basis of $5,000 and a Fair

question 1

Multiple Choice

Ashley transfers property with a tax basis of $5,000 and a fair market value of $3,000 to a corporation in exchange for stock with a fair market value of $2,000 and $500 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $500 on the property transferred. What is Ashley's tax basis in the stock received in the exchange?

• A)$5,000
• B)$4,000
• C)$3,000
• D)$2,000

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