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Section 351 issue: what is the gain recognized?

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1. Ms. Pinella contributed property (adjusted basis $50,000, FMV $84,000) to Price Inc. in exchange for 200 shares of its stock (FMV=$74,000) and $10,000 cash. This exchange qualified under Section 351. Her gain recognized on this transaction is:

a. $50,000
b. $84,000
c. $54,000
d. $10,000

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Solution Summary

The cited solution provides documented information to explain the Section 351 transfers. After the research, the answer ot the problem is explained.

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Section 351(a) provides that no gain or loss shall be 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
(as defined in § 368(c)) of the corporation.

Section 368(c) defines control to mean the ownership of stock possessing at
least 80 percent of the total combined ...

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