Which of the following is a result of a corporation's assumption of a mortgage in a property transfer?

When a corporation assumes a mortgage during a property transfer, the value of that mortgage is indeed considered part of the fair market value of the distribution. This treatment aligns with tax principles where the liabilities associated with a property are treated as part of the property's value for tax calculation purposes.

In simple terms, when the corporation takes on the mortgage, this assumption reflects the economic reality of the transaction: the corporation is not only acquiring an asset (the property) but also a corresponding liability (the mortgage). Therefore, the value of the mortgage can impact various tax implications, including gain recognition or basis calculations for both the transferor and the corporation.

The other scenarios do not accurately reflect the implications of a corporation assuming a mortgage. Full ownership without liabilities does not occur, as the assumption of the mortgage means that those liabilities remain tied to the property even as it changes hands. If a transfer occurs solely for stock, tax deferment may apply under certain conditions, but gain recognition can still happen under different circumstances. Lastly, a distribution does not automatically result in taxable income for the transferor; tax treatment depends on factors like the basis in the property and the nature of the transaction. Understanding these nuances is crucial to grasping the tax consequences of property transfers involving corporate