Casey Transfers Property with a Tax Basis of $2,500 and a Fair

question 93

Multiple Choice

Casey transfers property with a tax basis of $2,500 and a fair market value of $6,900 to a corporation in exchange for stock with a fair market value of $5,300 and $700 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $900 on the property transferred. Casey also incurred selling expenses of $316. What is the amount realized by Casey in the exchange?

• A) $6,900
• B) $6,584
• C) $6,484
• D) $5,784

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Definitions:

Capital Lease

A contractual arrangement that transfers substantially all the benefits and risks of ownership to the lessee so that the lease is in effect a purchase of the property.

Plant Assets

Long-term tangible assets used in the operation of a business, such as buildings, machinery, and equipment.

Loss On Redemption

A financial loss experienced when redeeming bonds or securities before their maturity date for a price higher than their face value.

Carrying Value

The book value of an asset or liability on a company's balance sheet, calculated as its original cost minus any depreciation, amortization, or impairment costs.