Ashley Transferred a Building (Adjusted Basis of $70,000 and Fair

question 9

Multiple Choice

Ashley transferred a building (adjusted basis of $70,000 and fair market value of $180,000) to Lavender Corporation.In return, Ashley received 80% of Lavender Corporation's stock (worth $68,000) and an automobile (fair market value of $32,000) .In addition, there is an outstanding mortgage of $80,000, held for 5 years, on the building that Lavender Corporation assumed.With respect to this trans?action:

• A)Ashley has no recognized gain.
• B)Ashley's recognized gain is $32,000.
• C)Ashley's recognized gain is $42,000.
• D)Lavender Corporation's basis in the building is $70,000.
• E)None of the above.

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Definitions:

Reasoning

The process of thinking about something in a logical way to form a conclusion or judgment.

Knowledge

Information, understanding, or skill that one gains through experience or education.

Premises

Statements or propositions from which another is inferred or follows as a conclusion.

Inferred

Deduced or concluded information from evidence and reasoning rather than from explicit statements.