In General, the Basis of Property to a Corporation in a Transfer

question 42

True/False

In general, the basis of property to a corporation in a transfer that qualifies as a nontaxable exchange under § 351 is the basis in the hands of the transferor shareholder decreased by the amount of any gain recognized on the transfer.

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Definitions:

Financial Leverage

Financial leverage is the use of borrowed funds to increase the potential return of an investment.

Breakeven Analysis

A financial calculation to determine the point at which revenue and expenses are equal, resulting in no net loss or gain.

Financial Leverage

The use of borrowed funds to finance the purchase of assets with the expectation that the income or capital gain from the new assets will exceed the cost of borrowing.

EBIT

A measure of a firm's profit that disregards expenses from interest and income taxes, termed as Earnings Before Interest and Taxes.