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:

Durkheim

A French sociologist, Emile Durkheim, who is considered one of the founding fathers of sociology, emphasized the importance of social institutions and structures in influencing human behavior and social solidarity.

Totem

A natural object, animal, or phenomenon regarded as a symbol representing clans, tribes, or families, carrying spiritual or cultural significance.

Durkheim

Emile Durkheim was a pioneering French sociologist who made significant contributions to the study of social structures, collective consciousness, and the role of societal norms and institutions.

Ritual

A set of fixed actions and sometimes words performed regularly, especially as part of a religious or cultural ceremony.