Bob Transfers Assets with a $100,000 FMV (Basis $60,000)and $70,000

question 84

Multiple Choice

Bob transfers assets with a $100,000 FMV (basis $60,000) and $70,000 of business-related liabilities to a corporation in exchange for 100% of the corporation's stock with a FMV of $30,000.The corporation assumes the $70,000 mortgage.The transfer qualifies under Sec.351.What is Bob's gain recognized on the transfer?

• A)$0
• B)$10,000
• C)$30,000
• D)$40,000

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Definitions:

Fiscal Period

A specific time frame used for financial reporting and budgeting, often synonymous with a fiscal year, but can refer to any defined accounting period.

Adjusting Entry

An entry made in the accounting journals at the end of an accounting period to allocate income and expenditure to the appropriate period.

Vertical Analysis

A financial analysis method that expresses each item in a financial statement as a percentage of a base figure, facilitating comparisons.

Balance Sheet

A summary detailing the assets, dues, and shareholders' stake in a corporation at a fixed point in time.