A Transfers Machines Valued at $170,000 (Basis = $150,000) Along

question 74

Multiple Choice

A transfers machines valued at $170,000 (basis = $150,000) along with $30,000 cash to AB Corporation and B transfers real property valued at $320,000 (basis = $310,000) to the corporation. A receives 40 percent of the outstanding stock and B receives 60 percent. B also receives $20,000 from the corporation. What is AB Corporation's basis for the machines?

• A) $150,000
• B) $160,000
• C) $170,000
• D) $180,000

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Definitions:

Commerce Clause

The Commerce Clause refers to a provision in the United States Constitution that grants Congress the power to regulate commerce with foreign nations, among the several states, and with the Indian tribes.

Civil Remedy

Legal means through which a court enforces a right, imposes a penalty, or makes another court order to impose its will.

Legal Drinking Age

The minimum age at which an individual is legally allowed to purchase and consume alcoholic beverages, which varies by jurisdiction.

Federal Funds

Central bank balances held by banks at the Federal Reserve which are available for lending to other banks overnight to meet reserve requirements.