Facts for Questions 1 through 5: In the five situations described below in an incorporation transaction qualifying under Code Section 351, Nancy transfers accounts receivable and land to Newco Corporation. The accounts receivable have a fair market value of $100 and a basis to Nancy of $30 and the land has a fair market value of $100 and a basis to Nancy of $80. The fair market value of Newco Corporation stock is stated below, as well as the fair market value of any other consideration Nancy gets.
1. Nan receives only stock worth $200. What is Nan's basis in her Newco Corporation stock?
a. $110
b. $70
c. $80
d. $200
e. None of the above
2. Nan receives stock worth $100 and cash of $100. What is Nan's basis in her Newco Corporation stock?
a. $110
b. $70
c. $80
d. $200
e. None of the above
3. Nan receives Newco Corporation stock worth $100, and Newco Corporation assumes a $100 incurred liability of Nan with no improper tax motive on the part of Newco Corporation or Nan. What is Nan's basis in her Newco Corporation stock?
a. $110
b. $80
c. $10
d. $200
e. None of the above
4. Nan receives Newco Corporation stock worth $100, and Newco Corporationassumes a $100 incurred liability of Nan with an improper tax motive on the part of Nan. What is Nan's basis in her Newco Corporation stock?
a. $60
b. $80
c. $10
d. $200
e. None of the above
5.Nan receives Newco Corporation stock worth $70, and Newco Corporation assumes a $130 incurred liability of N with no improper tax motive on the part of Newco Corporation or Nan. What is Nan's basis in her Newco Corporation stock?
a. $60
b. $70
c. $200
d. $0
e. None of the above