Zeppo and Harpo Are Equal Owners of the Marx Corporation

question 12

Multiple Choice

Zeppo and Harpo are equal owners of the Marx Corporation. During the current year, they agree to admit Groucho as a shareholder. Groucho will contribute $35,000 in cash and property worth $75,000 (adjusted basis of $55,000) for 40% of Marx Corporation's stock. How much gain will Groucho recognize from the transfer of the assets to the corporation?

• A)$-0-
• B)$20,000
• C)$35,000
• D)$55,000
• E)$75,000

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