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?

---

Definitions:

Biological Mechanism

The processes and systems within living organisms that lead to observable phenomena.

Deep Processing

In the encoding of information, the processing of meaning rather than simply the physical or sensory features of a stimulus.

Sensory Register

A memory system that momentarily preserves extremely accurate images of sensory information.

Holding Bin

A temporary storage area or method used for organizing and managing information or materials until they are needed.