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Porter, the sole shareholder of Preston Corp., transferred the 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
FMV $200,000 $500,000
What amount represents the corporation’s basis in the property received?As what I learned, the answer should be $300,000. But the correct answer is $550,000. Does anyone know why is this and explain it to me please? Thank you so much!!!
Harry Kim
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