Yenhung,who Is Single,forms a Corporation Using a Tax-Free Asset Transfer,which $$\begin{array} {| l | l |} \hline \text { Ordinary loss } & \text { Capital loss } \\\hline \$ 0 & \$ 20,000 \\\hline\end{array}$$

question 67

Multiple Choice

Yenhung,who is single,forms a corporation using a tax-free asset transfer,which qualifies under Sec.351.She contributes property having an adjusted basis of $50,000 and an FMV of $40,000.The stock received from the corporation is Sec.1244 stock.When Yenhung sells the stock for $30,000,her loss is

• A) \[\begin{array} {| l | l |}
• \hline \text { Ordinary loss } & \text { Capital loss } \\
• \hline \$ 0 & \$ 20,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} {| l | l |}
• \hline \text { Ordinary loss } & \text { Capital loss } \\
• \hline \$ 10,000 & \$ 10,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} {| l | l| }
• \hline \text { Ordinary loss } & \text { Capital loss } \\
• \hline\$ 20,000 & \$ 0 \\
• \hline
• \end{array}\]
• D) \[\begin{array} {| l | l| }
• \hline \text { Ordinary loss } & \text { Capital loss } \\
• \hline\$ 10,000 & \$ 0 \\
• \hline
• \end{array}\]

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Definitions:

Sediment

Particles of rock, organic material, or minerals that are transported and deposited by wind, water, or ice, often forming sedimentary layers.

Hydroelectric Dam

A structure built across a river to hold back water for the purpose of generating electricity through the movement of water.

Permeable Rocks

Rocks that have connected spaces or pores, allowing fluids to pass through them, critical in the study of groundwater flow and hydrocarbon reservoirs.

Faults and Fractures

Breaks in the Earth's crust where blocks of the crust have moved relative to each other due to tectonic forces.