Jeff Bezos, after stepping down from Amazon, forms a new corporation by contributing land with a basis of $150,000 and a fair market value of $2,000,000. The land has an outstanding mortgage loan of $400,000. Prior to the transfer, Jeff Bezos was in dire need of some cash to fund his gambling trip to Las Vegas, so he refinanced the existing mortgage and received $200,000 in cash as a result of the refinance. What code section would apply to the above transaction? What gain, if any, would Jeff Bezos have to recognize for tax purposes?

Jeff Bezos, after stepping down from Amazon, forms a new corporation by contributing land with a basis of $150,000 and a fair market value of $2,000,000. The land has an outstanding mortgage loan of $400,000. Prior to the transfer, Jeff Bezos was in dire need of some cash to fund his gambling trip to Las Vegas, so he refinanced the existing mortgage and received $200,000 in cash as a result of the refinance. What code section would apply to the above transaction? What gain, if any, would Jeff Bezos have to recognize for tax purposes?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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