Shareholder a Owns 100% of the Shares of Sun Co

question 7

Multiple Choice

Shareholder A owns 100% of the shares of Sun Co., and shareholder B owns 100% of the shares of Moon Co.Sun Co.is buying an asset from Moon Co.with a fair market value of $150,000.The tax cost of the asset is $80,000.Neither corporation has loss-carryovers.The arm's-length companies have elected to structure the transfer of the asset in a manner which will defer any taxes at this time.Moon Co.would like to take the maximum note receivable on the transfer.Which of the following is correct?

• A)Sale of asset = $80,000, Non-share consideration = $70,000, Share consideration = $10,000
• B)Sale of asset = $150,000, Non-share consideration = $80,000, Share consideration = $70,000
• C)Sale of asset = $80,000, Non-share consideration = $10,000, Share consideration = $70,000
• D)Sale of asset = $150,000, Non-share consideration = $70,000 Share consideration = $80,000

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