Sybil Transfers Property with a Tax Basis of $5,000 and a Fair

question 54

Multiple Choice

Sybil transfers property with a tax basis of $5,000 and a fair market value of $6,000 to a corporation in exchange for stock with a fair market value of $3,000 and $2,000 cash in a transaction that qualifies as a section 351 transfer.The corporation assumed a liability of $1,000 on the property transferred.What is Sybil's tax basis in the stock received in the exchange?

• A)$6,000.
• B)$5,000.
• C)$4,000.
• D)$3,000.

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Definitions:

Misinformation Effect

A phenomenon where a person's recall of memories becomes less accurate due to being provided with misleading information after the event.

Eyewitness Recollections

Memories of an event as reported by individuals who have directly witnessed the event.

Underestimate

To judge something to be smaller or less important than it actually is.

Overestimate

To assess something as more significant or numerous than it actually is, often due to overvaluation or miscalculation.