Yang, Jane, and Li incorporated YJL Corp. Yang transferred equipment (FMV = $60,000, basis = $55,000) in exchange for 25% of YJL Corp.’s stock (FMV = $50,000) and $10,000 cash. Jane transferred land (FMV = $110,000; basis = $80,000) in exchange for 50% of YJL Corp.’s stock (FMV = $100,000) and $10,000 cash. Li contributed $50,000 cash in exchange for 25% of YJL Corp.’s stock (FMV = $50,000). Assume YJL Corp. is a controlled corporation of Yang, Jane, and Li. What is Li’s basis in YJL Corp. stock?
Yang, Jane, and Li incorporated YJL Corp. Yang transferred equipment (FMV = $60,000, basis = $55,000) in exchange for 25% of YJL Corp.’s stock (FMV = $50,000) and $10,000 cash. Jane transferred land (FMV = $110,000; basis = $80,000) in exchange for 50% of YJL Corp.’s stock (FMV = $100,000) and $10,000 cash. Li contributed $50,000 cash in exchange for 25% of YJL Corp.’s stock (FMV = $50,000). Assume YJL Corp. is a controlled corporation of Yang, Jane, and Li. What is Li’s basis in YJL Corp. stock?
Chapter4: Corporations: Organization And Capital Structure
Section: Chapter Questions
Problem 1BCRQ
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Yang, Jane, and Li incorporated YJL Corp.
Yang transferred equipment (FMV = $60,000, basis = $55,000) in exchange for 25% of YJL Corp.’s stock (FMV = $50,000) and $10,000 cash.
Jane transferred land (FMV = $110,000; basis = $80,000) in exchange for 50% of YJL Corp.’s stock (FMV = $100,000) and $10,000 cash.
Li contributed $50,000 cash in exchange for 25% of YJL Corp.’s stock (FMV = $50,000).
Assume YJL Corp. is a controlled corporation of Yang, Jane, and Li.
What is Li’s basis in YJL Corp. stock?
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