Mandy and Greta Form Tan, Inc

question 48

Essay

Mandy and Greta form Tan, Inc., by transferring the following assets to the corporation in exchange for 5,000 shares of stock each.
Mandy: Cash of $450,000
Greta: Land (worth $450,000; adjusted basis of $90,000).
How much gain must Tan recognize on the receipt of these assets?

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Definitions:

Foot-in-the-door Technique

A persuasion strategy in which agreement to a small, initial request increases the likelihood of compliance with a larger, later request.

Door-in-the-face Technique

A persuasion strategy where a large, unreasonable request is made first and, if refused, a smaller, more reasonable request is made.

Social Loafing

The occurrence in which people put in less effort towards reaching a goal while working as part of a team compared to when working by themselves.

Social Facilitation

The tendency for people to perform differently, usually better, on tasks when they are in the presence of others compared to when they are alone.