Danny and Jasmine Form a Business Entity with Danny Contributing

question 4

Multiple Choice

Danny and Jasmine form a business entity with Danny contributing cash of $80,000 and Jasmine contributing land which has a basis of $65,000 and a fair market value of $80,000.At the end of the first year of operations, the business entity has earned a profit of $50,000 and has outstanding liabilities of $20,000.Which of the following statements are correct?

• A)If the entity is an S corporation, Jasmine's stock basis at the end of the first year is $90,000.
• B)If the entity is a partnership, Jasmine's basis for her partnership interest at the end of the first year is $65,000.
• C)If the entity is a C corporation, Jasmine's stock basis at the end of the first year is $80,000.
• D)All of the above.
• E)None of the above.

---

Definitions:

Argument

A set of statements where one or more premises are used to provide support for a conclusion.

Appeal to Authority

A logical fallacy where the conclusion is justified by citing an authoritative or perceived authoritative figure who mentioned it.

Non-expert

An individual who lacks specialized knowledge or expertise in a particular area or field.

Proposition

A proclamation or affirmation that presents a belief or assessment, capable of being true or untrue.