Beth Transfers an Asset Having an FMV of $200,000 and an Adjusted

question 85

Multiple Choice

Beth transfers an asset having an FMV of $200,000 and an adjusted basis of $150,000 to ABC Corporation in a Sec. 351 transaction. Beth receives in exchange ABC common stock having an FMV of $175,000 and Zeus Corporation common stock (a capital asset) having an FMV of $25,000 and a basis of $10,000 to ABC Corporation. ABC Corporation must recognize

• A)no gain.
• B)a $15,000 capital gain.
• C)a $25,000 capital gain.
• D)a $50,000 capital gain.

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Definitions:

Carbon-14 Ages

An age estimate of an organic material based on the measurement of the radioactivity of its carbon-14 content.

Granite Intrusion

The penetration of molten granite into pre-existing rocks in the Earth's crust, cooling and solidifying below the surface.

Cross-Cutting Relations

A geological principle stating that rocks disrupted or penetrated by an igneous intrusion or fault are older than the intrusion or fault itself.

Superposition

A principle in geology that states in an undeformed sequence of sedimentary rocks, each layer is older than the one above.