Walter, Who Owns All of the Ajax Corporation Stock, Purchases

question 76

Multiple Choice

Walter, who owns all of the Ajax Corporation stock, purchases a truck from Ajax Corporation in January. The truck cost $12,000 and has a $10,000 adjusted basis. Walter pays the truck's $8,000 FMV. Later in the same year, Walter sells the truck to an unrelated party for $13,000. With respect to these transactions

• A)Ajax Corporation reports a loss of $2,000 and Walter reports a gain of $5,000.
• B)Ajax Corporation reports no loss and Walter reports a gain of $3,000.
• C)Ajax Corporation reports a loss of $4,000 and Walter reports a gain of $5,000.
• D)Ajax Corporation reports no loss and Walter reports a gain of $5,000.

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Definitions:

Battery

A criminal offense involving the unconsented physical contact or harm inflicted upon another person.

Implied Assumption

An unstated belief or premise that is considered to be understood or accepted within a particular context.

Strict-Liability Torts

Legal claims that impose liability on a party without a finding of fault, such as liability for harm caused by inherently dangerous activities or defective products.

Inherently Dangerous

An activity or condition is inherently dangerous if it naturally has potential to cause harm or damage without additional negligence or intent.