Lynn Transfers Land Having a $50,000 Adjusted Basis, an $80,000

question 96

Multiple Choice

Lynn transfers land having a $50,000 adjusted basis, an $80,000 FMV, and $10,000 cash to Allied Corporation in exchange for 100% of Allied's stock. The corporation assumes the $70,000 mortgage on the land. Which of the following statements is correct?

• A) Lynn recognizes no gain and the stock basis is $60,000.
• B) Lynn recognizes a $10,000 gain and the stock basis is zero.
• C) Lynn recognizes no gain and the stock basis is $50,000.
• D) Lynn recognizes a $10,000 gain and the stock basis is $60,000.

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Definitions:

Additive Mix

A color mixing method that involves combining different colors of light, leading to increased brightness.

Retina

The light-sensitive layer at the back of the eye, containing cells that convert light into neural signals.

Optic Nerve

The optic nerve is a paired nerve that transmits visual information from the retina to the brain.

Iris

The colorful segment of the eye that modulates pupil dimension and the level of light that gets in.