FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text: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?
(hint: either 357(a), 357(b), 357(c)) Briefly explain your answer.
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