Matthew Contributes Land with a Fair Market Value of $350,000

question 2

Multiple Choice

Matthew contributes land with a fair market value of $350,000 and an adjusted basis of $300,000, and Harold contributes $350,000 cash to form Matthew & Harold, Inc, a C corporation.Matthew and Harold each own 50% of the stock.One year later, Matthew & Harold, Inc.sells the land for $400,000.How much gain is recognized by each shareholder?

• A)$100,000 to Matthew, $0 to Harold.
• B)$75,000 to Matthew, $25,000 to Harold.
• C)$50,000 to Matthew, $50,000 to Harold.
• D)$25,000 to Matthew, $25,000 to Harold.
• E)None of the above.

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