Pedro transfers property with an adjusted basis of 100000 an

Pedro transfers property with an adjusted basis of $100,000 and a fair market value pursuant to a transaction that qualifies as a valid IRC Section 351 transaction. What is the property that it receives? A. $0 B. $45,000 C. $100,000 D. $145,000

Solution

Answer A ) $0

For qualifying as a valid IRC Section 351 transaction it is necessary that there must be transfer of property to a corporation in exchange of common stock  the transferor will not recognize any gain or loss on the transfer of property to the corporation. The transferor’s basis in the stock received will equal the basis of the property transferred