Lynn Transfers Property (Basis of $225,000 and Fair Market Value

question 87

Multiple Choice

Lynn transfers property (basis of $225,000 and fair market value of $300,000) to Condor Corporation in exchange for § 1244 stock. The transfer qualifies as a nontaxable exchange under § 351. In the current year, Lynn sells the Condor stock for $100,000. Assume Lynn files a joint return with her husband, Ricky. With respect to the sale, Lynn has:

• A) An ordinary loss of $125,000.
• B) An ordinary loss of $100,000 and a capital loss of $25,000.
• C) A capital loss of $125,000.
• D) An ordinary loss of $100,000 and a capital loss of $100,000.
• E) None of these.

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Definitions:

Claim

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Settlement

The resolution or agreement reached between parties in a dispute, often involving the payment or receipt of money without going to trial.

Professional Tone

A manner of communication that is formal, respectful, and suited for business or workplace environments.

Routine, Positive Messages

Messages that are regularly communicated and convey affirmative or positive information.