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Topic
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Porter, the sole shareholder of Preston Corp., transferred property to the corporation as a contribution to capital. Two years later, Corley transferred property to the corporation in exchange for a 10% interest in corporate stock. The property transferred was valued as follows:
Porter’s Transfer Corley’s Transfer
Basis $50,000 $250,000
Fair market value 200,000 500,000
What amount represents the corporation’s basis in the property received?
A.
$700,000
B.
$550,000
C.
$450,000
Incorrect D.
$300,000
Im a bit confused here, i thought when you transfer assets you use the tax payers basis, but here they are using the tax payers basis, in the second transfer they are using the fmv, what gives? i fear im missing something here.
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