@wsurfes – There are different rules for basis of a contribution from Corp to Shareholder v. when Shareholder exchanges property for stock.
Shareholder basis in stock for transferred property =
Adjusted Basis + Gain recognized – Liabilities assumed by Corp (boot received)
If the shareholder owns 80% of corp. after exchange of property for stock, there is no Gain/Loss and the adjusted basis of the property is equal to the stock basis. If >20% stock was exchanged for SERVICES all shareholders have taxable event.
Corp Basis in property received from shareholder in exchange for stock =
Adjusted Basis + Gain recognized by shareholder.
*Gain is only recognized by shareholder if Boot is received or the Liabilities assumed > Adjusted Basis ‘
When a Corp distributes assets to shareholders the Corp treats the distribution like it sold the assets for FMV.
It will recognize a gain if FMV – Basis is positive. No loss is allowed.
If liabilities are assumed by the shareholder, there could be a gain for the corp, if the liabilities assumed are > Basis.
The shareholder basis is: FMV + Cash received.
Liabilities assumed do not change the shareholders basis in a distribution.
A:[73]97 F:[74]85 R:86 B:[74]82
*NINJA 10 Pt. COMBO & Yaeger*
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