Question

Gearty and Olinto organized The Worthington Corp., which issued voting common stock with a fair market value of $240,000. They each transferred property in exchange for stock as follows
Property Adjusted Basis Fair Market Value Percentage of The Worthington Corp. Stock Acquired
Gearty Building $80,000 $164,000 60%
Olinto Land 10,000 96,000 40%
The building was subject to a $20,000 mortgage that was assumed by The Worthington Corp. What was The Worthington Corp.'s basis in the building?

Answer 1

Answer:

$80,000

Explanation:

Since Worthington Corp. assumed the the $20,000 mortgage which the building was subject to, the Worthington Corp.'s basis in the building is the adjusted basis of the building.

Therefore, Worthington Corp.'s basis in the building is $80,000 which is the adjusted basis of the building.