Harry forms the Nectarine Corporation during the 2013 tax year. To form the corp

Question

Harry forms the Nectarine Corporation during the 2013 tax year. To form the corporation, Harry transfers assets having a fair market value of $650,000 to Nectarine Corporation for 100 percent of the corporation's stock. Harry's adjusted basis in the assets transferred was $350,000 and Nectarine Corporation assumed a $200,000 mortgage on the assets. If the fair market value of the stock received by Harry is $450,000, what is his basis in the stock received from the corporation?

A. $150,000

B. $200,000

C. $350,000

D. $450,000

E. None of the above

Explanation / Answer

Fair value of stock received =450000

Fair value of asset given net of liability = 650000 - 200000 = $ 450000

share received = 350000 - 200000 =150000

correct option is "A"

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