Question

In year 1, Stone, a cash basis taxpayer, incorporated her CPA practice. No liabilities were transferred. The following assets were transferred to the corporation: Cash (checking account) $500 Computer equipment: Adjusted Basis 30,000 Fair market value 34,000 Cost 40,000 Immediately after the transfer, Stone owned 100% of the corporation’s stock. The corporation’s total basis for the transferred assets is: a. $30,500 b. $40,500 c. $30,000 d. $34,500

Answer 1

a. $30,500

Step-by-step explanation:

The computation of the corporation’s total basis for the transferred assets is shown below:

= Cash basis of checking account + adjusted basis of computer equipment

= $500 + $30,000

= $30,500

We simply added the cash basis of checking account and the adjusted basis of computer equipment so that the corporation total basis of the transferred asset could come