Arnold Purchases a Building for $750,000 That Is Going to Be

question 109

Multiple Choice

Arnold purchases a building for $750,000 that is going to be used by his wholly owned corporation. Which of the following statements are correct?

• A) If Arnold contributes the building to the corporation, there will be no gross income in the current year and a carryover basis of $750,000.
• B) If Arnold leases the building to the corporation, lease-rental payments of $30,000 per year to Arnold will result in a $30,000 deduction for the corporation.
• C) If Arnold leases the building to the corporation, lease-rental payments of $30,000 per year to Arnold will result in $30,000 of gross income for Arnold.
• D) Leasing the building to the corporation will contribute to the tax avoidance objective of minimizing double taxation.
• E) All of these statements are correct.

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