If an Individual Transfers an Ongoing Business to a Corporation

question 119

Multiple Choice

If an individual transfers an ongoing business to a corporation in a Sec. 351 exchange, the individual must recognize any realized gain

• A)only if the adjusted basis of the property transferred is less than the FMV of the stock received.
• B)if the transferor receives property other than stock.
• C)if the FMV of the property exchanged exceeds the FMV of the stock received.
• D)both A and B above

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Definitions:

Loss

A situation where business expenses exceed revenues, resulting in a negative net income.

Disposal of Asset

The process of selling, scrapping, or otherwise disposing of a company's asset.

Copyright

A legal right granted to the creator of an original work, protecting it from unauthorized use.

Intangible Assets

Non-physical assets with economic value, such as patents, trademarks, copyrights, and goodwill, that are expected to provide benefits to a business over multiple periods.