Casey Transfers Property with a Tax Basis of $2,000 and a Fair

question 53

Multiple Choice

Casey transfers property with a tax basis of $2,000 and a fair market value of $5,000 to a corporation in exchange for stock with a fair market value of $4,000 and $400 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $600 on the property transferred. Casey also incurred selling expenses of $300. What is the amount realized by Casey in the exchange?

• A)$5,000
• B)$4,700
• C)$4,600
• D)$4,200

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Definitions:

Full Employment

Full employment refers to the condition in which all available labor resources are being used in the most efficient way possible, minimizing unemployment to only frictional or structural levels.

Opportunity Cost

The value of the next best alternative forgone as a result of making a decision.

Submarine

A watercraft capable of independent operation underwater, often used for military purposes.

Production Possibility Frontier

An illustration representing the maximum production capabilities for multiple goods with a certain amount of resources.