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

question 67

Multiple Choice

Rachelle transfers property with a tax basis of $800 and a fair market value of $900 to a corporation in exchange for stock with a fair market value of $750 and $50 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $100 on the property transferred. What is the corporation's tax basis in the property received in the exchange?

• A)$900
• B)$850
• C)$800
• D)$750

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Definitions:

Interest Rate

The percentage of the principal amount charged by a lender to a borrower for the use of assets, typically expressed on an annual basis.

Compounded Semiannually

Interest on a loan or investment calculated twice a year and added to the principal so that subsequent interest is earned on the increased principal.

Annual Interest

The amount of interest payable every year on a loan or investment, typically expressed as a percentage of the principal amount.

High School Graduation

The completion of the required coursework and achievement of necessary credits for a student to officially finish high school and receive a diploma.