Non-Depreciable Real Property Case

Non-Depreciable Real Property Case

Instructions/Descriptions

Non-Depreciable Real Property Case of X Corporation

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Question Description

Except as otherwise stated, A starts out with non-depreciable real property (a capital asset) worth $100 (adjusted basis $40) and ends up with cash of $50 plus a 50% interest (worth $50) in, a newly organized corporation that owns the property. For each part, determine the following:

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1. A’s amount realized
2. A’s gain or loss realized

iii. A’s gain or loss recognized in the character thereof

1. A’s basis in the X stock received v. A’s holding period for the X-stock received (tack or not?)
2. X corporation’s basis in the property received

vii. X corporation’s holding period for the property received (text or not?)

viii. The amount and character of X’s gain if X immediately sells the property for $100

(a) Al transfers the property to X in exchange for all of X’s stock. Shortly thereafter, Al sells half of his X stock to Barbara for $50 and either

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1. The stock sale is a separate event from the prior incorporation transaction; or
2. The stock sale is an integral part of the incorporation plan. How would the result be different if the basis for Al’s property were $200 rather than $40?

(b) A sells a half interest in the property to B for $50. A and B then jointly transfer their property interest to X Corporation in exchange for X’s stock.

(c) A and B jointly organize X Corporation. A transfers his property to X in exchange for $50 in cash and half of X Corporation’s stock. B transfers $50 in cash to X in exchange for the other half of X’s stock.

Non-Depreciable Real Property Case of X Corporation

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