Carl transfers land with a fair market value of $120,000 and basis of $30,000, to a new

Question:

Carl transfers land with a fair market value of $120,000 and basis of $30,000, to a new corporation in exchange for 85 percent of the corporation’s stock. The land is subject to a $45,000 liability, which the corporation assumes. What amount of gain must Carl recognize as a result of this transaction?

a. $0

b. $15,000

c. $30,000

d. $45,000

e. None of the above

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...

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