Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation’s stock. The property transferred to the corporation had the following fair market values and adjusted bases: FMV Adjusted Basis Inventory $ 68,000 $ 34,000 Building 510,000 340,000 Land 782,000 1,020,000 Total $ 1,360,000 $ 1,394,000 The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the corporation’s stock received in the exchange was $1,260,000. The transaction met the requiremen
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Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation’s stock. The property transferred to the corporation had the following fair market values and adjusted bases:
| FMV | Adjusted Basis | ||||
| Inventory | $ | 68,000 | $ | 34,000 | |
| Building | 510,000 | 340,000 | |||
| Land | 782,000 | 1,020,000 | |||
| Total | $ | 1,360,000 | $ | 1,394,000 | |
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The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the corporation’s stock received in the exchange was $1,260,000. The transaction met the requirements to be tax-deferred under §351. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)
a. What amount of gain or loss does Zhang realize on the transfer of the property to her corporation?
C. What is Zhang’s tax basis in the stock she receives in the exchange?
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