In 2006,Gita Contributed Property with a Basis of $500,000 and a Fair

question 75

Essay

In 2006,Gita contributed property with a basis of $500,000 and a fair market value of $3,000,000 to a qualified small business corporation for all of its common stock.She sells the stock in 2015 for $4,000,000.What is the amount of taxable gain on the transaction?

---

Definitions:

Liquidated Damages

A contractual provision that specifies a predetermined sum to be paid if a party breaches the agreement.

Reasonably Related

A legal standard used to determine if the connection between two concepts or actions is logical or justified, often in the context of regulatory or employment actions.

Compensatory Damages

Monetary awards given to a plaintiff to compensate for losses, injury, or harm suffered due to the defendant's actions.

Impossibility of Performance

A legal doctrine where a party is released from a contract because events have occurred making it objectively impossible to perform the contract's obligations.