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What is the basis i the land receives

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Problem 1: Red Blossom Corporation transferred its 40 percent interest to Tea Company as part of a complete liquidation of the company. In the exchange, Red Blossom received land with a fair market value of $535,000. The corporation basis in the Tea Company stock was $315,000. The land had a basis to Tea Company of $617,500. What amount of gain does Red Blossom recognize in the exchange and what is the basis i the land it receives?

a. $220,000 gain recognized and a basis in the land of $617,500
b. $220,000 gain recognized and a basis in the land of $535,000
c. No gain recognized and a basis in the land of $617,500
d. No gain recognized and a basis in the land of $302,500

Reference no: EM132780938

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