Max Transfers the Following Properties to a Newly Created Corporation

question 107

Multiple Choice

Max transfers the following properties to a newly created corporation for $90,000 of stock and $10,000 cash in a transaction that qualifies under Sec.351. $$\begin{array} { | l | c | c | c | } \hline & \text { Asset One } & \text { Asset Two } & \text { Asset Three } \\\hline \text { FMV } & \$ 30,000 & \$ 45,000 & \$ 25,000 \\\text { Basis } & 35,000 & 40,000 & 20,000 \\\hline\end{array}$$ Max's recognized gain is

• A)$3,000.
• B)$5,000.
• C)$7,000.
• D)$10,000.

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Definitions:

Vacuum Pump

A device that removes gas molecules from a sealed volume to create a partial vacuum, often used in automotive and industrial applications.

A/C System

Air Conditioning System, a system for controlling the humidity, ventilation, and temperature in a vehicle or building.

Boil Point

The temperature at which a liquid turns to vapor.

Pressure Relief Valve

A pressure-limiting device that trips at a predetermined pressure to define circuit pressure or act as a safety device. A safety pop-off valve is one type of pressure relief valve.