Wade and Paul form Swan Corporation with the following investments. Wade transfe
ID: 2340856 • Letter: W
Question
Wade and Paul form Swan Corporation with the following investments. Wade transfers machinery (basis of $40,000 and fair market value of $100,000), while Paul transfers land (basis of $20,000 and fair market value of $90,000) and services rendered (worth $15,000) in organizing the corporation. Each is issued 25 shares in Swan Corporation. With respect to the transfers:
a.
Swan Corporation has a basis of $20,000 in the land transferred by Paul.
b.
Swan Corporation has a basis of $100,000 in the machinery transferred by Wade.
c.
Swan Corporation has a basis of $30,000 in the land transferred by Paul.
d.
Swan Corporation has a basis of $40,000 in the land transferred by Paul
a.
Swan Corporation has a basis of $20,000 in the land transferred by Paul.
b.
Swan Corporation has a basis of $100,000 in the machinery transferred by Wade.
c.
Swan Corporation has a basis of $30,000 in the land transferred by Paul.
d.
Swan Corporation has a basis of $40,000 in the land transferred by Paul
Explanation / Answer
Answer: a. Swan Corporation has a basis of $20,000 in the land transferred by Paul.
Reason: Paul has transferred land basis of $ 20,000 to Swan Corporation.
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