Wade and Paul Form Swan Corporation with the Following Investments

question 1

Multiple Choice

Wade and Paul form Swan Corporation with the following investments. Wade transfers machinery (basis of $40,000 and fair market value of $100,000) , while Paul transfers land (basis of $20,000 and fair market value of $90,000) and services rendered (worth $10,000) in organizing the corporation. Each is issued 25 shares in Swan Corporation. With respect to the transfers:

• A) Wade has no recognized gain? Paul recognizes income/gain of $80,000.
• B) Neither Wade nor Paul has recognized gain or income on the transfers.
• C) Swan Corporation has a basis of $30,000 in the land transferred by Paul.
• D) Paul has a basis of $30,000 in the 25 shares he acquires in Swan Corporation.
• E) None of the above.

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Fetus

A developing mammal or human from the embryonic stage to birth, typically spanning from the ninth week of gestation until childbirth.

Fetus

The developmental stage of a human between the embryonic phase and birth.

Embryonic Period

A stage in prenatal development occurring from the 2nd to the 8th week after fertilization during which major organs and structures begin to develop.

Developing Fetus

Describes the growth and development stages of an unborn baby inside the mother's womb.