Perry Organized Cardinal Corporation 10 Years Ago by Contributing Property

question 107

Essay

Perry organized Cardinal Corporation 10 years ago by contributing property worth $2 million (basis of $450,000) for
2,500 shares of stock in Cardinal, representing 100% of the stock in the corporation. Perry later gave each of his children, Brittany and Julie, 750 shares of stock in Cardinal Corporation. In the current year, Perry transfers property worth $600,000 (basis of $150,000) to Cardinal for 1,000 shares in the corporation. What gain, if any, will Perry recognize on the transfer?

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Definitions:

Organization

A structured arrangement of people working together to accomplish specific goals.

Geographically

Relating to the physical location or spatial characteristics of an area or place.

Hierarchically

In a manner that arranges things or concepts in levels of importance or rank.

Lines Of Reporting

The hierarchical structure within an organization that defines who reports to whom, outlining the flow of authority and accountability.