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:

Vertical Axis

The perpendicular line in a graph or chart representing the range of one of the variables under consideration.

Horizontal Axis

The x-axis in a graph, typically used to represent the independent variable or scale of measurement.

Widths

Widths refer to the measure of the extent of something from side to side; in data visualization, it could refer to the thickness of lines or bars.

Scale

An ordered series of marks at fixed intervals used in measurements or to represent the relationship of numbers.