F and G Formed a Corporation on March 1 This

question 58

Multiple Choice

F and G formed a corporation on March 1 this year.F transferred equipment worth $40,000 (basis $15,000) in exchange for 40 shares of stock, and performed services worth $10,000 in exchange for 10 shares of stock.In exchange for 50 shares of stock, G contributed land worth $70,000 (basis $9,000) subject to a mortgage of $20,000, which the corporation assumed.What is F's total basis in the stock that he received?

• A)$15,000
• B)$40,000
• C)$25,000
• D)$50,000
• E)None of the above

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Definitions:

Finished Desk

A final product, specifically a desk, that has completed the manufacturing process and is ready for sale.

Processing Cost

The total expense incurred to convert raw materials into finished products, including labor, materials, and overhead costs in a manufacturing process.

Differential Analysis

The process of comparing the cost and revenue of different business decisions to determine which option offers the best financial outcome.

Make or Buy

A decision-making process in businesses to determine whether to produce goods internally or purchase them from an external supplier.