Question

Eva contributes land (capital asset) with a fair market value of $400,000 and a tax basis of $600,000 for 300 shares of EJ Corp. and a note for $100,000 Josie contributes a warehouse with a fair market value of $800,000 and a tax basis of $200,000. The warehouse is subject to a mortgage of $500,000 which is assumed by EJ Corp. Josie receives 300 shares of EJ Corp. What tax basis does EJ Corp have in the land and warehouse? A. Land $600,000 and warehouse $ 500,000 B. Land $400,000 and warehouse $500,000 C. Land $400,000 and warehouse $200,000 D. Land $600,000 and warehouse $200,000

          Eva contributes land (capital asset) with a fair market value of $400,000 and a tax basis of $600,000 for 300 shares of EJ Corp. and a note for $100,000 Josie contributes a warehouse with a fair market value of $800,000 and a tax basis of $200,000. The warehouse is subject to a mortgage of $500,000 which is assumed by EJ Corp. Josie receives 300 shares of EJ Corp.
What tax basis does EJ Corp have in the land and warehouse?
A. Land $600,000 and warehouse $ 500,000
B. Land $400,000 and warehouse $500,000
C. Land $400,000 and warehouse $200,000
D. Land $600,000 and warehouse $200,000

Eva contributes land (capital asset) with a fair market value of 400,000 and a tax basis of600,000 for 300 shares of EJ Corp. and a note for 100,000 Josie contributes a warehouse with a fair market value of800,000 and a tax basis of 200,000. The warehouse is subject to a mortgage of500,000 which is assumed by EJ Corp. Josie receives 300 shares of EJ Corp.
What tax basis does EJ Corp have in the land and warehouse?
A. Land 600,000 and warehouse 500,000
B. Land 400,000 and warehouse500,000
C. Land 400,000 and warehouse200,000
D. Land 600,000 and warehouse200,000

Added by Mary C.

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