Mario and Lupita Form a Corporation in a Transaction Coming

question 7

Multiple Choice

Mario and Lupita form a corporation in a transaction coming under Sec. 351. Lupita transfers property with an adjusted basis of $150,000 and an FMV of $200,000 in exchange for one- half of the stock. The property has an $80,000 mortgage, which the corporation assumes. Lupita has a recognized gain of

• A) $100,000.
• B) $80,000.
• C) $50,000.
• D) $0.

---

Definitions:

Output

Output refers to the amount of goods or services produced by a firm or economy within a certain period.

Physical Capital

Consists of tangible, man-made objects that a business uses to produce goods or services, such as buildings, machinery, and equipment.

Short Run

A period in economics where at least one factor of production is fixed, limiting the ability of the economy or firm to adjust to changes in demand or supply.

Productive

Relating to or involving the creation of goods or services that satisfy human wants; the efficiency and effectiveness in producing outputs from inputs.