McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick

Exercise 31

Carla incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values and tax-adjusted bases:

The corporation also assumed a mortgage of $120,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $300,000.
a. What amount of gain or loss does Carla realize on the transfer of the property to her corporation
b. What amount of gain or loss does Carla recognize on the transfer of the property to her corporation
c. What is Carla's basis in the stock she receives in her corporation
d. Would you advise Carla to transfer the building and land to the corporation What tax benefits might she and the corporation receive if she kept the building and land and leased it to the corporation