Vanessa contributed $20,000 of cash and land with a fair market value of $100,000 and an adjusted basis of $40,000 to cook, inc. (an s corporation) when it was formed. the land was encumbered by a $30,000 mortgage executed two years before. what is vanessa's tax basis in her cook, inc. stock after formation?

Vanessa's tax basis in cook inc.           $50,000

Explanation:

Given:

Cash = $20,000

Fair market value = $100,000

Adjusted basis = $40,000

Mortgage executed = $30,000

Now,

For the tax basis

             cash                                          $30,000

add;      Land ( adjusted basis )             $40,000

less ;     Mortgage                                  $20,000

Vanessa's tax basis in cook inc.           $50,000

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