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:

Physical Examination

A clinical assessment where a medical professional evaluates the body of a patient for any potential medical conditions.

Clinic Checkup

A routine medical examination at a clinic to assess general health or monitor an existing condition.

Ortolani Sign

A clinical finding in the physical examination of infants, indicating developmental dysplasia of the hip.

Moro Reflex

An involuntary response seen in newborns, which is triggered by a sudden loss of support, making the baby startle, fling arms out sideways, and then quickly pull them back.