Person A transferred property FMV $100,000 adjusted basis $50,000 to X partnership in exchange for a 20% capital and profits interest in X and $50,000 cash.

A. What income, gain or loss, if any, does A recognize on the transfer?

B. What is X’s basis in the property received from A?

2. Z Corporation (“Z”), a calendar year corporation, had $10,000 accumulated E&P at the beginning of 2020. Z had two shareholders (“A”) and (“B”). On May 5, 2020, Z distributed a capital asset fair market value (“FMV”) $5,000, adjusted basis $6,000 to A, and a capital asset FMV $7,000, AB $3,000, but subject to a liability of $2,000 to B.

a. What income, gain or loss, if any, does Z recognize during 2020?

b. What is Z’ Accumulated E&P at the beginning of 2021?

Answer rating: 100% (QA)

a accordance with the provisions of section 721 no gain ... View the full answer