Four Individuals Form Chickadee Corporation Under § 351 Both Jane and Walt Receive Stock in Chickadee Corporation Equal

question 95

Multiple Choice

Four individuals form Chickadee Corporation under § 351.Two of these individuals, Jane and Walt, made the following contributions: $\begin{array}{lrr}&&\text { Fair Market }\\& \underline{\text {Adjusted Basis}}& \underline{\text {Value}}\\\text { From Jane- }\\\text { Cash } & \$ 360,000 & \$ 360,000 \\\text { Patent } & -0- & 40,000 \\\\\text { From Walt- } & & \\\text { Equipment (depreciation claimed of } \$ 100,000) & 240,000 & 370,000\end{array}$ Both Jane and Walt receive stock in Chickadee Corporation equal to the value of their investments.

• A)Jane must recognize income of $40,000; Walt has no income.
• B)Neither Jane nor Walt recognize income.
• C)Walt must recognize income of $130,000; Jane has no income.
• D)Walt must recognize income of $100,000; Jane has no income.
• E)None of the above.

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Definitions:

Equilibrium Wage

The wage rate at which the quantity of labor demanded by employers matches the quantity of labor supplied by workers, resulting in a balanced labor market.

Northern United States

The region of the United States located in the northern part of the country, often characterized by distinct seasonal weather patterns and historical industrial development.

Labor Market

The marketplace where labor services are offered and demanded, determining employment levels and wage rates.

Capital Equipment

Durable goods or assets used in the production of goods or services, often involving significant investment and a long use life.