@allaboard. Thank you. Here is another one.
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 received 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.
Explanation:
X Corp. received land with an adjusted basis of $40,000 from shareholder B. X Corp. paid B an additional $20,000 in cash. The tax basis of the land for X Corp. is $60,000, made up of the $40,000 in basis from B and the $20,000 paid to B.
Why are they using 40K basis instead of 70K even tho B only owns 50% of stock (instead of 80%). I am lost!!
FAR: 71, 77!
AUD: 69, 80
BEC: 72
REG: 84
.