Bob Transfers Assets with a $100,000 FMV (Basis $60,000) and $70,000

question 1593

Multiple Choice

Bob transfers assets with a $100,000 FMV (basis $60,000) and $70,000 of business- related liabilities to a corporation in exchange for 100% of the corporation's stock with a FMV of $30,000. The corporation assumes the $70,000 mortgage. The transfer qualifies under Sec. 351. What is Bob's gain recognized on the transfer?

• A) $10,000
• B) $30,000
• C) $40,000
• D) $0

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Definitions:

Decreases

A reduction in size, amount, extent, or number.

Thermal Energy

The internal energy present in a system due to its temperature, associated with the random motion of molecules.

Higher Temperature

A condition of increased heat in a given environment or system, often affecting physical states, chemical reactions, and biological processes.

Kilocalories

A unit of energy commonly used to measure the energy content of food, equal to 1,000 calories.