Basis | Fair market value | |
Cash | $10,000 | $10,000 |
Inventory | 15,000 | 30,000 |
Depreciable property | 50,000 | 20,000 |
Land | 25,000 | 10,000 |
100,000 | 70,000 |
The basis for the shares received by C is $100,000, which is applied $1,000 to each share. However, the basis of the shares for purposes of section 1244 is $70,000 ($700 per share), the basis for general purposes reduced by $30,000, the excess of the aggregate adjusted basis of the property transferred over the aggregate fair market value of such property.
26 C.F.R. §1.1244(d)-1