Casey Transfers Property with a Tax Basis of $2,000 and a Fair

question 53

Multiple Choice

Casey transfers property with a tax basis of $2,000 and a fair market value of $5,000 to a corporation in exchange for stock with a fair market value of $4,000 and $400 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $600 on the property transferred. Casey also incurred selling expenses of $300. What is the amount realized by Casey in the exchange?

• A)$5,000
• B)$4,700
• C)$4,600
• D)$4,200

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Definitions:

Savings Account

A bank account where money is kept so that it can earn interest over time, typically used for holding funds that are not needed for daily expenses.

Annual Simple Interest

Interest calculated once a year on the principal sum, without compounding.

Earned

Received as a result of work or effort.

Simple Interest Rate

The rate at which simple interest is calculated, usually on an annual basis.