Ann Transferred Land Worth $200,000, with a Tax Basis of $40,000

question 32

Multiple Choice

Ann transferred land worth $200,000, with a tax basis of $40,000, to Brown Corporation, an existing entity, for 100 shares of its stock. Brown Corporation has two other shareholders, Bill and Bob, each of whom holds 100 shares. With respect to the transfer:

• A) Ann has no recognized gain.
• B) Brown Corporation has a basis of $160,000 in the land.
• C) Ann has a basis of $200,000 in her 100 shares in Brown Corporation.
• D) Ann has a basis of $40,000 in her 100 shares in Brown Corporation.
• E) None of the above.

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Definitions:

Ethical Conduct

The practice of behaving in a manner that is considered morally right, fair, and appropriate in a given context, especially in professional settings.

Manufacturing

The process of producing goods from raw materials through various processes, machinery, and operations, typically in a factory setting.

Retail Companies

Businesses that sell goods directly to consumers, typically operating from physical locations or through online platforms.

Proprietorship

A business owned by one individual.