- 6 - section 351 transaction, the corporation would be entitled to an upward basis adjustment in the property received in the transaction in the same amount as the gain recognized. The answer to amendment did not, however, specify the assets eligible for the basis adjustment or the amount of any such adjustment. The corporation filed a motion for a more definite statement, requesting that respondent identify the assets as to which the corporation would receive a section 362(a) adjustment, in what proportion, and over what period of time that adjustment would be depreciable. The motion was granted in part, and respondent was ordered to file a statement indicating respondent's position as to the appropriate amount and allocation of the section 362(a) adjustment. Respondent subsequently filed an amended answer to the corporation's amendment to petition, responding that the appropriate amount of the section 362 adjustment was either $280,477 or the actual amount of net capital gain ultimately recognized by the Bowdens on the transfer of assets to the corporation. Respondent also determined that the section 362 basis adjustment should be allocated to Mr. Bowden's rights under the contract with Farmer's Insurance Group. The Bowdens had stated the basis of this asset as $245,000 in their 1991 tax return, but respondent subsequently determined the basis to be zero.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011