In Return for Services Rendered to It by C, the ABC

question 39

Multiple Choice

In return for services rendered to it by C, the ABC partnership transfers a one-fourth capital interest to C when it only has one asset, a tract of land with a basis of $20,000 and fair market value of $30,000.The partnership has no liabilities.As a result, ABC's recognized gain and basis in the land, respectively, are

• A)$10,000 and $30,000
• B)$2,500 and $22,500
• C)$2,500 and $27,500
• D)$10,000 and $20,000

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Definitions:

Par Common Stock

The nominal or face value assigned to a share of common stock, which has relevance in corporate accounting.

Par Value

A nominal value assigned to a stock or bond, representing its face value rather than its market value.

Stock Split

This action increases the number of shares of a corporation by issuing more shares to current shareholders, which typically results in a decrease in the per-share price, making the stock more accessible to a wider range of investors.

Stock Split

A corporate action where a company divides its existing shares into multiple shares, effectively reducing the price of individual shares without changing the overall market capitalization.