Brad Forms Vott Corporation by Contributing Equipment, Which Has a Basis

question 23

Multiple Choice

Brad forms Vott Corporation by contributing equipment, which has a basis of $50,000 and an FMV of $40,000 in exchange for Vott stock. Brad also contributes $5,000 in cash. If the transaction meets the Sec. 351 control and ownership tests, what are the tax consequences to Brad?

• A)He recognizes a $5,000 loss.
• B)He recognizes a $5,000 gain and a $10,000 loss.
• C)He recognizes neither a gain nor a loss.
• D)He recognizes a $10,000 loss.

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Definitions:

Affect Stability

The consistency of an individual's emotional state over time.

Affect Intensity

The strength or degree of emotion a person typically experiences and expresses.

Depression

A chronic mental condition where an individual experiences a lasting state of depression or a diminished interest in previously enjoyed activities, greatly affecting their day-to-day life.

Emotionally Intelligent

The ability to recognize, understand, and manage one's own emotions and the emotions of others.