A Shareholder's Basis in Stock Received in a Sec

question 7

Multiple Choice

A shareholder's basis in stock received in a Sec. 351 transaction is

• A)increased by the gain recognized by the corporation.
• B)decreased by the gain recognized by the transferor.
• C)decreased by liabilities assumed by the corporation.
• D)increased by the FMV of boot received from the corporation.

---

Definitions:

Industrial Regulation

Governmental regulation of industries to correct market failures, protect consumers, and preserve competitive markets.

Social Regulation

Rules and policies designed to correct market failures that affect people's health, safety, welfare, and social wellbeing.

Administrative Costs

Administrative Costs are expenses related to the general operation of a business, including expenses such as office supplies, salaries of non-production employees, and legal and accounting services.

Compliance Costs

Expenses that businesses incur to adhere to industry regulations, standards, and laws, including the costs of implementing necessary procedures and reporting.