Ann Transferred Land Worth $200,000, with a Tax Basis of $40,000

question 32

Multiple Choice

Ann transferred land worth $200,000, with a tax basis of $40,000, to Brown Corporation, an existing entity, for 100 shares of its stock. Brown Corporation has two other shareholders, Bill and Bob, each of whom holds 100 shares. With respect to the transfer:

• A) Ann has no recognized gain.
• B) Brown Corporation has a basis of $160,000 in the land.
• C) Ann has a basis of $200,000 in her 100 shares in Brown Corporation.
• D) Ann has a basis of $40,000 in her 100 shares in Brown Corporation.
• E) None of the above.

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Definitions:

First-Cousin Marriages

Marriages between individuals who have one set of grandparents in common, legal in some cultures and regions, while prohibited in others due to concerns about genetic risks.

Britain

An island in the North Atlantic which constitutes the major part of the United Kingdom, encompassing England, Scotland, and Wales.

First-Cousin Marriage

A marriage between individuals who have one set of grandparents in common, legally and culturally allowed in some societies but prohibited in others.

Birth Defects

Physical or biochemical abnormalities present from birth, which can cause physical or mental disabilities.