What are the tax consequences to Allie

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Problem - Allie forms Broadbill Corporation by transferring land (basis of $125,000, fair market value of $775,000), which is subject to a mortgage of $375,000. One month prior to incorporating Broadbill, Allie borrows $100,000 for personal reasons and gives the lender a second mortgage on the land. Broadbill Corporation issues stock worth $300,000 to Allie and assumes the mortgages on the land.

Required -

a. What are the tax consequences to Allie and to Broadbill Corporation?

b. How would the tax consequences to Allie differ if she had not borrowed the $100,000?

Reference no: EM132631041

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