Hazel Transferred the Following Assets to Starling Corporation

question 116

Multiple Choice

Hazel transferred the following assets to Starling Corporation. In exchange,Hazel received 50% of Starling Corporation's only class of stock outstanding.The stock has no established value.However,all parties believe that the value of the stock Hazel received is the equivalent of the value of the assets she transferred.The only other shareholder,Rick,formed Starling Corporation five years ago.

• A)Hazel has no gain or loss on the transfer.
• B)Starling Corporation has a basis of $48,000 in the machinery and $108,000 in the land.
• C)Starling Corporation has a basis of $36,000 in the machinery and $144,000 in the land.
• D)Hazel has a basis of $276,000 in the stock of Starling Corporation.
• E)None of the above.

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Definitions:

Free Trade

A policy to eliminate discrimination against imports and exports, allowing goods to move freely across borders without tariffs, quotas, or other restrictions.

Quantity Demanded

The specific amount of a good or service that consumers are willing to buy at a given price, holding other factors constant.

United States

A country located in North America, consisting of 50 states and a federal district, known for its significant influence on world economics, politics, and culture.

Excess Demand

A market condition in which the quantity demanded of a product exceeds the quantity supplied at a given price.