Broom Corporation Transfers Assets with an Adjusted Basis of $300,000 $$\begin{array} { | l | l | } \hline \text { Broom } & \text { Docker } \\\hline \$ 0 & \$ 0 \\\hline\end{array}$$

question 35

Multiple Choice

Broom Corporation transfers assets with an adjusted basis of $300,000 and an FMV of $400,000 to Docker Corporation in exchange for $400,000 of Docker Corporation stock as part of a tax-free reorganization.The Docker stock had been purchased from its shareholders one year earlier for $350,000.How much gain do Broom and Docker Corporations recognize on the asset transfer?

• A) \[\begin{array} { | l | l | }
• \hline \text { Broom } & \text { Docker } \\
• \hline \$ 0 & \$ 0 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | l | }
• \hline \text { Broom } & \text { Docker } \\
• \hline \$ 0 & \$ 50,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | l | }
• \hline \text { Broom } & \text { Docker } \\
• \hline \$ 100,000 & \$ 0 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | l | }
• \hline \text { Broom } & \text { Docker } \\
• \hline \$ 100,000 & \$ 50,000 \\
• \hline
• \end{array}\]

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Definitions:

Billable Hours

The amount of time a professional, such as a lawyer, charges their client for, based on the hours they work on a specific case or project.

Fee Splitting

Fee splitting refers to the practice of sharing fees among different professionals, such as lawyers or doctors, which is often regulated due to ethical concerns.

Nonbillable

Nonbillable refers to time or activities related to a job or profession that cannot be charged to a client as part of services rendered.

Administrative Work

Tasks related to the management and operation of an organization, including paperwork, scheduling, and organizational duties.