A shareholder contributes land with a basis of 69 and a fai

A shareholder contributes land with a basis of $ 69 and a fair market value of $ 44 in return for common stock. Generally, what is the corporation\'s basis in the land?

Solution

Corporation basis should be the net proceeds from the land if such was sold out. That value is fair market value. In corporation books, land should be recorded at fair market value.

Hence, corporation\'s basis in the land is $44.