Tony Stewart forms Nascar Co. by transferring property (basis of $145, FMV of $865) which is subject to a mortgage of $310. A month prior to incorporating Nascar Co., Tony borrows $175 for personal purposes in exchange for a second mortgage on the property. Nascar Co. issues stock worth $380 to Tony and assumes the two mortgages on the property. What is Tony's recognized gain, as well as his basis? What is Nascar Co.'s basis?
Tony Stewart forms Nascar Co. by transferring property (basis of $145, FMV of $865) which is subject to a mortgage of $310. A month prior to incorporating Nascar Co., Tony borrows $175 for personal purposes in exchange for a second mortgage on the property. Nascar Co. issues stock worth $380 to Tony and assumes the two mortgages on the property. What is Tony's recognized gain, as well as his basis? What is Nascar Co.'s basis?
Chapter18: Corporations: Organization And Capital Structure
Section: Chapter Questions
Problem 34P
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Transcribed Image Text:Tony Stewart forms Nascar Co. by transferring property (basis of $145, FMV of $865) which is subject
to a mortgage of $310. A month prior to incorporating Nascar Co., Tony borrows $175 for personal
purposes in exchange for a second mortgage on the property. Nascar Co. issues stock worth $380
to Tony and assumes the two mortgages on the property.
What is Tony's recognized gain, as well as his basis? What is Nascar Co's basis?
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