Albert transfers land (basis of $140,000 and fair market value of $320,000) to Gold Corporation for 80% of its stock and a note payable in the amount of $80,000. Gold assumes Albert's mortgage on the land of $200,000.
A) Albert has a recognized gain on the transfer of $140,000.
B) Albert has a recognized gain on the transfer of $80,000.
C) Albert has a recognized gain on the transfer of $60,000.
D) Gold Corporation has a basis in the land of $220,000.
E) None of the above.

Question

Quizplus · Accepted Answer

Albert has a recognized gain on the transfer of $140,000 because the fair market value of the land ($320,000) is greater than its basis ($140,000), and he is not receiving full payment in the form of Gold Corporation's stock and the note payable. The assumption of the mortgage does not impact this gain calculation. None of the other options are correct based on the information provided.

Albert Transfers Land (Basis of $140,000 and Fair Market Value