Wade and Paul Form Swan Corporation with the Following Investments

question 89

Multiple Choice

Wade and Paul form Swan Corporation with the following investments. Wade transfers machinery (basis of $40,000 and fair market value of $100,000) and Paul transfers land (basis of $20,000 and fair market value of $90,000) and services rendered (worth $10,000) in organizing the corporation. Each is issued 25 shares in Swan Corporation. With respect to the transfers:

• A) Wade has no recognized gain; Paul recognizes income/gain of $80,000.
• B) Neither Wade nor Paul has recognized gain or income on the transfers.
• C) Swan Corporation has a basis of $30,000 in the land transferred by Paul.
• D) Paul has a basis of $30,000 in the 25 shares he acquires in Swan Corporation.
• E) None of these.

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Definitions:

Democratic Leader

A leadership style characterized by the involvement of team members in decision-making processes, promoting equality, and encouraging participation and consensus.

Sharing Information

Sharing information involves the distribution or exchange of data, knowledge, or insights between individuals or groups to enhance understanding, efficiency, or collaboration.

Retaining Authority

Keeping decision-making power and control within a certain level of the organization or with specific individuals.

Blake Mouton

A managerial grid model that identifies five different leadership styles based on the concern for people and the concern for production.