As part of a transaction that qualifies for section 351 Charles contributes a building with a Fair market Value of $200,000 in which he has a basis of $50,000 to McCrary Corp in exchange for stock. The building was subject to a liability of $20,000 which the Corporation also assumed. In addition, as part of the transaction, Charles received a piece of equipment with a fair market value of $10,000 and basis of $5000. Required: What basis does Charles have in his investment in McCrary corp?
As part of a transaction that qualifies for section 351 Charles contributes a building with a Fair market Value of $200,000 in which he has a basis of $50,000 to McCrary Corp in exchange for stock. The building was subject to a liability of $20,000 which the Corporation also assumed. In addition, as part of the transaction, Charles received a piece of equipment with a fair market value of $10,000 and basis of $5000. Required: What basis does Charles have in his investment in McCrary corp?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:As part of a transaction that qualifies for section 351 Charles contributes a building with a Fair market
Value of $200,000 in which he has a basis of $50,000 to McCrary Corp in exchange for stock. The
building was subject to a liability of $20,000 which the Corporation also assumed. In addition, as
part of the transaction, Charles received a piece of equipment with a fair market value of $10,000
and basis of $5,000.
Required: What basis does Charles have in his investment in McCrary corp?
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