[Anonymous]

I’m a bit confused with calculating the basis of both the S/H and Corp when forming a C-Corp.

In the notes I have written:

S/H Basis:

Adjusted Basis of property transferred

+Gain recognized, but only if it is for less than 80% interest

-Boot received, including any assumption of liabilities by the c-corp

=Shareholder’s Basis

Then the C-Corp’s basis is:

Shareholder’s adjusted basis

+Gain recognized by shareholder

=Basis

So an example: If I transfer a property with a FMV of 20 and a basis of 12 for 100% stock ownership and the company gives me cash of 3. Why would the SH basis = 12 and the corp = 15. Wouldn’t it be SH basis = 9 (12-3) and the Corp be 12? I’m probably over thinking it but it’s been stumping me for the longest time.