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

question 99

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 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:

Target Profit

The anticipated profit a business aims to achieve within a specific period, guiding pricing and production decisions.

Contribution Margin Ratio

The proportion of sales revenue that exceeds variable costs, indicating the percentage of each sales dollar available to cover fixed costs and provide profit.

Fixed Monthly Expenses

Regular expenses that do not vary in amount from month to month, such as rent and salaries.

Net Operating Income

A measure of a company's profitability from its regular, core business operations, excluding deductions of interest and taxes.