Rick Transferred the Following Assets and Liabilities to Warbler Corporation

question 42

Multiple Choice

Rick transferred the following assets and liabilities to Warbler Corporation. In return,Rick received $75,000 in cash plus 90% of Warbler Corporation's only class of stock outstanding (fair market value of $225,000) .

• A)Rick has a recognized gain of $60,000.
• B)Rick has a recognized gain of $75,000.
• C)Rick's basis in the stock of Warbler Corporation is $270,000.
• D)Warbler Corporation has the same basis in the assets received as Rick does in the stock.
• E)None of the above.

---

Definitions:

Frequency

The rate at which a vibration occurs that constitutes a wave, either in a material (as in sound waves), or in an electromagnetic field (as in radio waves and light).

Sound Wave

A type of pressure wave generated by vibrating objects, traveling through mediums such as air, water, or solids, and perceived as sound by the human ear.

Müller-Lyer Illusion

A visual illusion in which two lines of the same length appear to be of different lengths because of the orientation of arrow-like tails at their ends.

Depth Cue

Visual information that allows a person to judge the distance or depth of objects in relation to themselves.