Sofia Forms Lark Corporation with a Transfer of Appreciated Property

question 78

True/False

Sofia forms Lark Corporation with a transfer of appreciated property in exchange for all of its shares. Shortly thereafter, she transfers half her shares to her son, Ted. The later transfer to Ted could cause the original transfer to be taxable.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated by dividing current assets by current liabilities.

Payroll

The total amount of wages and salaries paid by a company to its employees.

Fundamental Analysis

Assessment of firm value that focuses on earnings and dividends prospects, expectations for future interest rates, and risk evaluation.

Earnings

The amount of money that a company makes during a specific period, usually defined as profit after all expenses have been subtracted from revenue.