Tristan Transfers Property with a Tax Basis of $900 and a Fair

question 119

Multiple Choice

Tristan transfers property with a tax basis of $900 and a fair market value of $1,200 to a corporation in exchange for stock with a fair market value of $900 and $200 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $100 on the property transferred. What is the corporation's tax basis in the property received in the exchange?

• A)$1,200
• B)$1,100
• C)$1,000
• D)$900

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Definitions:

Long-term Capital

Funds or assets held by a company for more than one year, used for financing long-term projects or investments.

Operating Working Capital

The difference between a company's current assets and current liabilities, excluding short-term debt. It reflects the funds that a business requires for day-to-day operations.

Effective Annual Cost

The total cost of borrowing on an annual basis, including interest and any fees, expressed as a percentage of the loan amount.

Trade Credit Terms

Trade credit terms are the conditions agreed upon between a buyer and seller regarding the payment for goods or services, including the repayment period and any discounts for early payment.