When Pheasant Corporation Was Formed Under § 351, Kristen Transferred

question 63

Multiple Choice

When Pheasant Corporation was formed under § 351, Kristen transferred property (basis of $26,000 and fair market value of $22,500) for § 1244 stock. Kristen's basis in the Pheasant stock is $26,000. Three years later, Pheasant Corporation goes bankrupt and its stock becomes worthless. Kristen, who is single, owned the stock as an investment. Kristen's loss is:

• A) $26,000 capital.
• B) $22,500 ordinary and $3,500 capital.
• C) $3,500 ordinary and $22,500 capital.
• D) $26,000 ordinary.
• E) None of the above.

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Definitions:

TMC

TMC can refer to the Technology & Maintenance Council, a professional organization focused on advancing truck technology and maintenance practices to improve vehicle reliability and efficiency.

Governor Cut-Out Pressure

The maximum pressure at which a compressor's governor stops the compressor from pumping air, usually to prevent over-pressurization in pneumatic systems.

Spring Brake Chamber

A component in air brake systems that uses spring force to apply the brakes for parking and emergency stopping.

Cage

A component in machinery, like bearings, that holds rolling elements in place while allowing them to rotate or slide.