Carlos and Ryan form Central Corporation. Carlos transfers property (basis of $2
ID: 2611030 • Letter: C
Question
Carlos and Ryan form Central Corporation. Carlos transfers property (basis of $20,000 and fair market value of $180000) in exchange for stock. Ryan transfers land( basis of $10000 and fair market value of 150000) and receives stock and $30000 in cash. Each receives 50% of Brown Corporation’s stock, which is worth a total of $360000. As a result of these transfers
a) Carlos has a recognized gain of $160000 and Ryan has recognized gain of $140000
b) Neither Carlos nor Ryan has any recognized gain or loss
c) Carlos has no recognized gain but Ryan has a recognized gain of 30000.
d) Brown corporation will have a basis in the land of $15000.
e) none of the above
Explanation / Answer
ans) Option (C) Carlos has no recognized gain but Ryan has a recognized gain of 30000.
360,000 /2 = 180,000
Carlos = 180,000 - 180,000 = 0
Ryan = 180,000 - 150,000 = 30,000