Janice Transfers Land and a Building with a $180,000 Adjusted

question 50

Essay

Janice transfers land and a building with a $180,000 adjusted basis and a $200,000 FMV to Optimum Corporation in exchange for 100% of its stock in a transaction qualifying under Sec.351.Shortly before the transfer,Janice obtains a $140,000 mortgage on the property and uses the funds to pay off personal debts.The corporation then assumes the $140,000 mortgage and issues stock worth $60,000.The mortgage assumption lacks business purpose and is intended to place cash in Janice's hands.
a.What is the gain realized by Janice?
b.What is the gain recognized by Janice?
c.What is the basis of the stock received by Janice?
d.What is Optimum's basis in the land and building?

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Definitions:

Formal Channels

Official, established pathways for communication or processes within an organization.

Proximity

The physical or psychological closeness between people, objects, or concepts, influencing interactions and relationships.

Nonverbal Cues

Communication without the use of spoken language, involving gestures, body language, facial expressions, and other physical behaviors to convey information.

Emotional Impact

The powerful effect an event, experience, or communication has on a person's emotions or feelings.