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:

Personal Use

Utilization of an item or service purely for an individual's needs or enjoyment, not for business or commercial purposes.

NAFTA

The North American Free Trade Agreement, a treaty between the United States, Canada, and Mexico designed to remove tariff barriers between the three countries.

Fair Competition

Economic conditions under which businesses operate on a level playing field, with regulations in place to prevent unfair practices that harm consumers or other businesses.

Free Trade Area

A region in which a group of countries agrees to reduce or eliminate trade barriers among themselves, promoting the free exchange of goods and services.