Antoine Transfers Property with a Tax Basis of $525 and a Fair

question 57

Multiple Choice

Antoine transfers property with a tax basis of $525 and a fair market value of $754 to a corporation in exchange for stock with a fair market value of $649 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $105 on the property transferred. What is Antoine's tax basis in the stock received in the exchange?

• A)$754
• B)$649
• C)$525
• D)$420

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Definitions:

Substitute Products

Goods or services that can be used in place of each other, satisfying essentially the same needs.

Ice Cream Sundaes

A dessert consisting of one or more scoops of ice cream topped with sauce or syrup, and often other toppings such as whipped cream, nuts, or cherries.

Successively Less Satisfaction

The phenomenon where each additional unit of a particular good or service consumed provides less satisfaction or utility than the previous one; also known as diminishing marginal utility.

Quantity Demanded

The amount of a product that consumers are willing and able to purchase at a given price level.