Which of the Statements Is Inaccurate Regarding Requirements for Nonrecognition

question 58

Multiple Choice

Which of the statements is inaccurate regarding requirements for nonrecognition of gain or loss upon the transfer of assets to a corporation in exchange for stock?

• A)Depreciation recapture applies to a transfer which falls under Sec.351.
• B)Property must be transferred to the corporation solely in exchange for stock of the corporation.
• C)The transferor-shareholders must be in control (80%)of the corporation immediately after the exchange.
• D)If property or money is received by the transferor,gain (but not loss)is recognized to the extent of the lesser of the boot received or the realized gain.

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Definitions:

Economic Loss

A monetary reduction in income, net worth, or value of assets beyond normal expectations, often as a result of business activities or economic policies.

Price

The amount of money required to purchase a good or service, determined by factors such as supply and demand.

Market Price

Market price is the current price at which a good or service can be bought or sold in a competitive marketplace.

Profit

The financial gain obtained when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.