This question is from Becker Regulation simulation R3:
Four people formed a C corporation, Mitchell contributed a property, basis = 40,000, FMV=80,000, liability associated with the property is 50,000, he also contributed 20,000 cash.
Question: what is the tax basis for the property ?
The answer is 40,000.
But I have different opinion: the liability > basis, so tax basis = greater of (adjusted basis, liability assumed), so the answer is 50,000 ?
Can anyone help me on that ???
Thank you !!!