Andre formed a corporation and owns all of the stock. He contributed property with a FMV of $10,000 and a basis of $7,000 and he received $1,000 cash from the corporation. Andre's taxable gain is:

$0
$1,000
$3,000
$10,000

is it 3000

I think 10000

No, the taxable gain in this scenario is not $3,000. To calculate Andre's taxable gain, we need to determine the difference between the fair market value (FMV) of the property contributed and the basis of the property.

In this case, Andre contributed property with a FMV of $10,000 and a basis of $7,000. Therefore, the difference between the FMV and the basis is $10,000 - $7,000 = $3,000.

However, taxable gain is typically only recognized when cash is received as compensation. In this case, Andre received $1,000 cash from the corporation. Since the cash received is less than the taxable gain of $3,000, Andre's taxable gain will be limited to the amount of cash received.

Therefore, Andre's taxable gain is $1,000.