Reference no: EM133091349

Question - Q1. In 2021, Kenneth Liu incorporated a financial services consulting business. Kenneth's only asset that was transferred to the corporation was a building with an adjusted tax basis of $200,000, and a fair market value of $400,000. The building had an existing mortgage of $100,000 that was assumed by the corporation. Immediately after the transfer, Kenneth owned 100% of the corporation's stock. What is the gain on Kenneth's transfer of the building to the corporation?

a) $0

b) $50,000

c) $200,000

d) Kenneth recognizes a loss on the transfer

Q2. Assume the same facts as question 1, except that the building had an existing mortgage of $250,000 that was assumed by the corporation. What is the gain on Kenneth's transfer of the building to the corporation?

a) $0

b) $50,000 

c) $200,000

d) Kenneth recognizes a loss on the transfer

Q3. Assume the same facts as question 1, except that the building had an existing mortgage of $450,000 that was assumed by the corporation. What is the gain on Kenneth's transfer of the building to the corporation?

a) $0

b) $50,000

c) $200,000

d) $250,000