If an Individual Transfers an Ongoing Business to a Corporation

question 90

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

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Definitions:

Flexible Budget

A budget which is responsive and adjusts based on fluctuations in levels of volume or activity.

Sales Commissions

Fees paid to salespersons for selling products or services, often a percentage of the sale amount.

Shipping Expenses

Costs incurred by a company to transport its products to customers, often classified as part of operating expenses.

Sales Manager's Salary

The compensation paid to the individual responsible for directing and managing a company's sales team and strategies.