What is Strawberry Corporation basis in the building

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Problem - Apricot incorporates her sole proprietorship. She transfers the following items to newly created Strawberry Corporation.

 

Adjusted basis

Fair market value

Cash

$13,000

$13,000

Building

$107,000

$150,000

Also, Strawberry Corporation assumes Apricot's mortgage payable of $136,000 which is secured by the building. Apricot held the mortgage for 14 years before the transfer.

Required - Answer each of the following questions. Explain your answers. Show and label your calculations.

1. How much gain must Apricot recognize?

2. What is Apricot's basis in the stock she receives?

3. What is Strawberry Corporation's basis in the building?

Reference no: EM133039416

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