[Anonymous]

the question is：

In April, A and B formed X Corp. A contributed $50,000 cash, and B contributed land worth $70,000 (with an adjusted basis of

$40,000). B also received $20,000 cash from the corporation. A and B each receives 50% of the corporation’s stock. What is

the tax basis of the land to X Corp.?

a. $40,000

b. $50,000

c. $60,000

d. $70,000

will anyone help me to solve such questions:

1、Is this a tax-free transaction for both corporation and shareholders？and the reason？

2、becker software said the basis of land is 60,000=(40000NBV+20000the price not named boot),20,000 cash is a price for the land but not a boot, so B can’t recognize gain.

is the cash not boot?

3、what is the stock basis for both shareholders？

(I think stock basis for A=50000,and for B=NBV(40000)+GAIN(20000)-BOOT(20000)=40000,does the formula and amount of B is right?)

[nolifecpa]

no, this is not a tax-free transaction. according to section 351, in order to be a tax free transaction 2 conditions must exist:

1) shareholder must own at least 80% (they only own 50%)

2) shareholder must only receive stock (B received cash along with stock)

not sure what you're asking in your 2nd question but the $20K is boot

agree with 3rd

hope that helps

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DONE

[Author]

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