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in this video were going to discuss how to calculate the transfer wars basis when you have a section 351 transaction so quick review the three requirements of section 351 are the the transfers are transferring property in exchange for a corporation stock and then they have control of the corporation immediately afterwards so lets jump into an example lets say again that you own a ferris wheel and that the adjusted basis or the cost of that Ferris wheel was a hundred thousand dollars but now the fair market value of the ferris wheel is nine hundred and seventy five thousand so you have a friend named Bozo the Clown and bozo owns a hundred percent on all twenty shares of a corporation called Seven Flags amusement park and what youre doing is youre gonna transfer your ferris wheel to the corporation to bozos corporation and now what bozos corporation seven Flags is going to give you an exchange is this going to give you 80 shares its gonna give you 80 shares of stock just like Bozo