Rick Transferred the Following Assets and Liabilities to Warbler Corporation

question 81

Multiple Choice

Rick transferred the following assets and liabilities to Warbler Corporation. ​
In return, Rick received $75,000 in cash plus 90% of Warbler Corporation's only class of stock outstanding (fair market value of $225,000) .

• A) Rick has a recognized gain of $60,000.
• B) Rick has a recognized gain of $75,000.
• C) Rick's basis in the stock of Warbler Corporation is $270,000.
• D) Warbler Corporation has the same basis in the assets received as Rick does in the stock.
• E) None of the above.

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Definitions:

Cheating On Agreements

The act of knowingly violating the terms of an agreement or contract, often to gain an unfair advantage or benefit.

Cartels

Formal agreements among competing firms to control prices or exclude entry of a new competitor in a market.

Entry Barriers

Obstacles that prevent or hinder new competitors from easily entering an industry or area of business.

Collusion

An agreement between two or more parties, often in a secretive manner, to limit open competition by deceiving or defrauding others of their legal rights, or to obtain an objective forbidden by law, typically by defrauding or gaining an unfair market advantage.