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:

Dendrite

The branched projections of a neuron that act to propagate the electrochemical stimulation received from other neural cells to the cell body, or soma, of the neuron.

Nucleus Of Neuron

The central part of a neuron containing the cell's genetic material and involved in regulating the cell's metabolism and protein synthesis.

Cell Body

The part of a neuron that contains the nucleus and most of the cell's organelles; it plays a critical role in processing and transmitting neural information.

Glia Cells

Non-neuronal cells in the central nervous system that support and protect neurons.