[Tobecpa1]

Washington, Lincoln, and Roosevelt formed President Corporation during 2013. Pursuant to the incorporation agreement, Washington transferred cash of $60,000 for 600 shares of stock, Lincoln transferred property with an adjusted basis of $5,000 and a fair market value of $15,000 for 150 shares of stock, and Roosevelt performed services valued at $25,000 in exchange for 250 shares of stock. Assuming the fair market value of President Corporation’s stock is $100 per share, what is President Corporation’s tax basis for the property received from Lincoln?

A. 0

B. 5,000

C.10,000

D.15,000

Please post your answer and explanation. If I study Becker I get different answer than Wiley 🙁 confused

[iwantmylifeback_]

15,000 the FMV because the people who contributed cash and property make up less then 80% of ownership.

BEC 85
AUD 99
REG 88
FAR 93

[MrsBing]

I got $15K. Actually had this problem a few days ago and got confused about the 80% and FV vs NBV.

Becker, Wiley Test Bank, and Ninja 10 Point Combo!

FAR: 89
REG: 87
AUD: 92
BEC: 75
Ethics: 90

Licensed Arizona CPA

[MrsBing]

I believe Becker and Wiley both say that contributing services isn't included in the calculation of the 80%> control.

Becker, Wiley Test Bank, and Ninja 10 Point Combo!

FAR: 89
REG: 87
AUD: 92
BEC: 75
Ethics: 90

Licensed Arizona CPA

[Tobecpa1]

Thanks all. It all makes sense now

[Author]

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