Arnold Purchases a Building for $750,000 Which Is Going to Be

question 48

Multiple Choice

Arnold purchases a building for $750,000 which is going to be used by his wholly-owned corporation.Which of the following statements are correct?

• A)If Arnold contributes the building to the corporation, there will be no gross income in the current year and a carryover basis of $750,000.
• B)If Arnold leases the building to the corporation, lease-rental payments of $30,000 per year to Arnold will result in a $30,000 deduction for the corporation.
• C)If Arnold leases the building to the corporation, lease-rental payments of $30,000 per year to Arnold will result in $30,000 of gross income for Arnold.
• D)Leasing the building to the corporation will contribute to the tax avoidance objective of minimizing double taxation.
• E)All of the above statements are correct.

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Definitions:

Apples

In economic terms, apples can serve as an example of a consumer good, whose supply and demand can be analyzed to understand market dynamics.

Bromides

Compounds containing the bromide ion or compounds that act as a sedative; colloquially used to refer to common sayings or platitudes that lack originality.

Platitudes

Statements that are used often and over time have become trite, commonplace, or clichéd.

Pareto Efficient Allocation

An allocation of resources that cannot be modified to make anyone better off without making someone else worse off.