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    Teddow's Avatar
    Teddow Posts: 1, Reputation: 1
    New Member

    Sep 25, 2006, 03:52 PM
    Corporate tax
    Ex.) Act as if a newly formed corporation receives property from an 80% controlled member. The member contributed property with a basis of $50,000 and a FMV of $100,000. In return, the corporation distributed $100,000 of its stock to the individual, which is like a like-kind exchange, which section 351 says defers when the gain will be recognized. So the individuals bases in the stock is now 50,000 (what the property was before it was transferred) and the corporations basis in the property received is now 50,000 (the basis the individual had in the stock before the transaction occurred. Based on these facts alone, WHAT WOULD THE BALANCE SHEET PRESENTATION LOOK LIKE. Is the property recorded at the historical cost of 50,000 (what the individual paid for it), or would the property be recorded at the FMV (what the corporation gave up in stock for it)
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert

    Sep 25, 2006, 05:21 PM
    Sorry, a bit beyond my level of expertise, as I do not do corporate taxes of this complexity.

    Some other member may be able to answer this question, but may not want to without compensation.

    The common sense answer would be the FMV, but tax law does not always follow common sense.
    vaya's Avatar
    vaya Posts: 55, Reputation: 1
    Junior Member

    Oct 1, 2006, 08:43 PM
    That's not a tax question. That's GAAP question.


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