Final answer:
Breslin Inc. will generally recognize no gain or loss on the capital contribution of investment property to its subsidiary, Crisler Company. The tax basis of the property to Crisler Company will be the same as it was to Breslin Inc., which is $2,225,000.
Step-by-step explanation:
When Breslin Inc. makes a capital contribution of investment property with a fair market value of $3,000,000 and a tax basis of $2,225,000 to its wholly-owned subsidiary, Crisler Company, the tax consequences to Breslin Inc. would generally be non-recognition of gain or loss under the Internal Revenue Code Section 351. This section provides that no gain or loss is recognized if property is transferred to a corporation by one or more persons solely in exchange for stock in such corporation and immediately after the exchange such person or persons are in control of the corporation.
For the second part of the question, the tax basis of the investment property to Crisler Company would generally be a carryover basis, meaning that it takes over the same basis that the property had in the hands of the contributor, Breslin Inc. Therefore, the tax basis of the investment property to Crisler Company after the contribution will be $2,225,000.