Eileen Transfers Property Worth $200,000 (Basis of $190,000) to Goldfinch

question 64

Multiple Choice

Eileen transfers property worth $200,000 (basis of $190,000) to Goldfinch Corporation. In return, she receives 80% of the stock in Goldfinch Corporation (fair market value of $180,000) and a long-term note (fair market value of $20,000) executed by Goldfinch and made payable to Eileen. Eileen recognizes gain on the transfer of:

• A) $0.
• B) $10,000.
• C) $20,000.
• D) $190,000.
• E) None of the above.

---

Definitions:

Representative Heuristic

A mental shortcut that involves making a probability judgement by comparing an object or event to a prototype of the object or event.

Additive Strategy

An approach where elements are added together to solve problems or make decisions, often seen in mathematics or decision-making processes.

Anchoring

Overestimation of the importance of a factor by focusing on it to the exclusion of other relevant factors.

Framing

The way information is presented so as to emphasize either a potential gain or a potential loss as the outcome.