In return for common stock a stockholder contributes land wi

In return for common stock, a stockholder contributes land with a basis of $ 10 and a fair market value of $23. A mortgage of $16 is assumed by the corporation. What is the corporation\'s basis in the land?

Solution

Corporation basis in land:

= Market value of land - Mortgages

= $23-$16

= $7

Hence, corporation\'s basis in the land is $7