Eileen Transfers Property Worth $200,000 (Basis of $190,000) to Goldfinch

question 64

Multiple Choice

Eileen transfers property worth $200,000 (basis of $190,000) to Goldfinch Corporation. In return, she receives 80% of the stock in Goldfinch Corporation (fair market value of $180,000) and a long-term note (fair market value of $20,000) executed by Goldfinch and made payable to Eileen. Eileen recognizes gain on the transfer of:

• A) $0.
• B) $10,000.
• C) $20,000.
• D) $190,000.
• E) None of the above.

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Definitions:

Potential Output

The maximum level of output an economy can achieve when utilizing its resources fully without causing inflation.

SRAS Curve

The Short-Run Aggregate Supply curve, which shows the relationship between the price levels in an economy and the quantity of goods and services that producers are willing to supply in the short term.

Passive Approach

An investment strategy or management style where decisions are minimal in an effort to mimic the returns of a particular market or index.

Aggregate Demand

The holistic demand for goods and services throughout an economy, estimated at a predetermined price level over a particular period.