Three Individuals Transferred Property to Newly Formed Triple Inc

question 31

Multiple Choice

Three individuals transferred property to newly formed Triple Inc.in exchange for 1,000 shares of common stock.Mr.Albert transferred assets with a $50,000 tax basis in exchange for 820 shares,Mrs.Billig transferred assets with a $9,000 tax basis in exchange for 148 shares,and Mrs.Crisp transferred $4,000 cash for 32 shares.Based on the FMV of the transferred assets,each Triple share is worth $125.Which of the following is false?

• A)Mr.Albert's tax basis in his 820 shares is $50,000.
• B)Triple Inc.'s tax basis in the assets transferred by Mrs.Billig is $9,000.
• C)Mrs.Crisp's tax basis in her 32 shares is $4,000.
• D)None of the above is false.

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Definitions:

Diminishing

A principle often referring to diminishing returns, where additional inputs result in progressively smaller increases in output.

Marginal Product

The additional output resulting from the use of one more unit of a production input, holding all other inputs constant.

Production Function

An economic model that describes the relationship between the inputs a firm uses and the output it creates.

Competitive

Relates to a market situation where multiple sellers are trying to appeal to the same customers, often leading to innovation and better prices.