Problem:
Karen, in forming a new corporation, transfers land to the corporation in exchange for 100 percent of the stock of the corporation. Karen's basis in the land is $275,000, and the corporation assumes liability on the property in the amount of $300,000. The stock received by Karen has a fair market value of $550,000.
Required:
Question 1: What is the amount of gain or loss that must be recognized by Karen on this transfer?
Question 2: What is the amount of Karen's basis in the corporation's stock?
Question 3: What is the amount of the corporation's basis in land?
Note: Please show the work not just the answer.