Which of the Following Statements Best Describes the Tax Consequences

question 100

Multiple Choice

Which of the following statements best describes the tax consequences that arise from a contribution of capital to a corporation by an existing sole-shareholder?

• A) The shareholder does not recognize gain and loss on the transfer and the corporation's basis in the property transferred equals zero.
• B) The shareholder does not recognize gain and loss on the transfer and the corporation's basis in the property transferred equals the shareholder's basis in the property transferred.
• C) The shareholder recognizes gain and loss on the transfer and the corporation's basis in the property transferred equals the shareholder's basis in the property transferred.
• D) The shareholder recognizes gain and loss on the transfer and the corporation's basis in the property transferred equals its fair market value.

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Definitions:

Psychoanalysis

A psychological theory and therapy method developed by Sigmund Freud, emphasizing the importance of unconscious processes and childhood experiences in determining behavior and psychological issues.

Catharsis

The act of liberating oneself from intense or suppressed feelings, thereby experiencing relief.

Unconscious

A part of the mind that is inaccessible to the conscious mind but that affects behavior and emotions.

Traumatic Events

Events that cause psychological trauma due to experiencing or witnessing life-threatening situations or severely distressing circumstances.