Dave contributes land (adjusted basis of $30,000;fair market value of $100,000)to Tan,Inc. ,in exchange for all of its stock.The land is encumbered by a mortgage of $27,000 which Tan assumes.Since the transaction qualifies for nonrecognition treatment under § 351,Tan's adjusted basis for the land is $3,000 ($30,000 - $27,000)and Dave's adjusted basis for the stock is $3,000.

Question

Quizplus · Accepted Answer

Under § 351, Tan's adjusted basis for the land is Dave's adjusted basis of $30,000, and Dave's adjusted basis for the stock is also $30,000, reduced by the mortgage assumed by Tan, resulting in $3,000.

Dave Contributes Land (Adjusted Basis of $30,000;fair Market Value of $100,000)to