[jhu0419]

This question is from Becker Regulation simulation R3:

Four people formed a C corporation, Mitchell contributed a property, basis = 40,000, FMV=80,000, liability associated with the property is 50,000, he also contributed 20,000 cash.

Question: what is the tax basis for the property ?

The answer is 40,000.

But I have different opinion: the liability > basis, so tax basis = greater of (adjusted basis, liability assumed), so the answer is 50,000 ?

Can anyone help me on that ???

Thank you !!!

[Anonymous]

Ahhh.. This same Sim got me also, I believe if you scroll down all the way to the bottom of the solution it states this but it is due to the fact that he also contributed money along with his asset so in total the Basis of his contributions were > than the debt assumed. Its tricky no doubt.

[jhu0419]

@bcjasper09 That make sense ! Thank you so much !

[Author]

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