[Emily]

This one had me confused for hours…

Clay, Finch, Lark and Token formed Amber Co., a C Corp. (all contributed property and the combined stock received is 100%)
Token contributed $10,000 in cash; property worth $40,000 ($5,000 basis), with related liability of $20,000 assumed by the corporation.
The answer provided states that the corporation’s basis in noncash property received from Token is $10,000, which is the carryover basis of $5,000 plus the $5,000 gain recognized by the shareholder. But shouldn’t the basis be $20,000 since the corporation’s basis in property received should be the greater of NBV+gain recognized by shareholder OR debt assumed by corporation?

Thanks in advance for your help.

[Meg]

i agree with you. now im confused lol

[Emily]

Unless the debt assumed is reduced by the $10,000 cash contributed by Token… Ugh I wish Becker had a better explanation

[Emily]

Unless the debt assumed is reduced by the $10,000 cash contributed by Token… Ugh I wish Becker had a better explanation

[Emily]

Unless the debt assumed is reduced by the $10,000 cash contributed by Token… Ugh I wish Becker had a better explanation

[Emily]

Unless the debt assumed is reduced by the $10,000 cash contributed by Token… Ugh I wish Becker had a better explanation

[Author]

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