Sami Transferred Property with a Fair Market Value of $600

question 40

Multiple Choice

Sami transferred property with a fair market value of $600 and a tax basis of $300 to a corporation in exchange for stock with a fair market value of $600. In addition, Sami received stock with a fair market value of $50 in exchange for services she provided to the corporation in the incorporation process. Which of the following statements best describes the tax result to Sami because of the exchanges?

• A)Sami will recognize $50 of compensation income, but she can count the shares of stock she receives in exchange for services in determining if the control test is met under §351.
• B)Sami will recognize $50 of compensation income, but she cannot count the shares of stock she receives in exchange for services in determining if the control test is met under §351.
• C)Sami will not recognize $50 of compensation income, but she can count the shares of stock she receives in exchange for services in determining if the control test is met under §351.
• D)Sami will not recognize $50 of compensation income, and she cannot count the shares of stock she receives in exchange for services in determining if the control test is met under §351.

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Definitions:

Cohort Differences

Variations in characteristics, experiences, attitudes, or outcomes among groups of individuals who share a particular demographic background or historical experience.

Long-term Changes

Alterations or developments that are enduring and persist over an extended period of time.

Longitudinal Method

A research design in which data from the same subjects are collected over a period of time to observe changes.

Fixed Group

A term not generally standard in research; possibly refers to a specific group that remains unchanged throughout the duration of a study. NO.