Which of the Following Statements Best Describes the Tax Consequences

question 78

Multiple Choice

Which of the following statements best describes the tax consequences that arise from a contribution of capital to a corporation by an existing sole shareholder?

• A)The shareholder recognizes a gain or loss on the transfer, and the corporation's basis in the property transferred equals its fair market value.
• B)The shareholder does not recognize a gain or loss on the transfer, and the corporation's basis in the property transferred equals the shareholder's basis in the property transferred.
• C)The shareholder recognizes a gain or loss on the transfer, and the corporation's basis in the property transferred equals the shareholder's basis in the property transferred.
• D)The shareholder does not recognize a gain or loss on the transfer, and the corporation's basis in the property transferred equals zero.

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Definitions:

Medicaid

A public assistance program that provides health care coverage to low-income individuals and families.

Health Cost Assistance

Financial aid or support programs designed to help individuals cover medical expenses and healthcare costs.

Insurance

A contractual agreement in which one party agrees to indemnify or reimburse another for loss that occurs under the terms of the contract.

Subscriber

An individual who has agreed to receive services or content, typically on a recurring basis, from a provider.