[john b]

On April 1, 2018, Crowe and Greene formed Apex Corporation. The same day Crowe paid $150,000 for 500 shares of Apex common stock, and Greene transferred land and building to Apex in exchange for 500 shares of common stock. The land and building had an adjusted basis to Greene of $120,000, a fair market value of $200,000, and was subject to a mortgage of $60,000 on April 1, 2018. The mortgage was assumed by Apex. Apex had no other shares of stock outstanding on April 1, 2018. The basis of the land and building to Apex on April 1, 2018, is

The answer is 120,000

Does anyone know why the mortgage that Apex assumed is not considered here? Thanks!

[freecloud]

This is corporation, not partnership. Based on corporation formation contribution over 80% ownership, it needs to use NBV which means adjusted basis. That is why the basis of land and building is 120,000.

[Author]

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