Tom owned all of the outstanding stock of NEWCO3 Corporation. Tom transferred a
ID: 2379902 • Letter: T
Question
Tom owned all of the outstanding stock of NEWCO3 Corporation. Tom transferred a building, cash, and publicly traded stock to NEWCO3 Corporation. The adjusted basis and the fair market value of the assets transferred to NEWCO3 Corporation, and the amount remaining on the mortgage on the building transferred, were as follows:
Basis Value Amount
Building $20,000 $55,000
Mortgage on building $45,000
Cash $5,000 $5,000
Publicly traded stock $15,000 $12,000
In exchange for the assets transferred to NEWCO3 Corporation, Tom received additional stock of NEWCO3 Corporation. How much gain did Tom recognize as a result of this transaction?
a. 0.
b. $5,000.
c. $25,000.
d. $27,000.
e. $45,000.
Tom owned all of the outstanding stock of NEWCO3 Corporation. Tom transferred a building, cash, and publicly traded stock to NEWCO3 Corporation. The adjusted basis and the fair market value of the assets transferred to NEWCO3 Corporation, and the amount remaining on the mortgage on the building transferred, were as follows:Explanation / Answer
e. $45,000