Jerry Transfers Two Assets to a Corporation as Part of a Sec

question 93

Multiple Choice

Jerry transfers two assets to a corporation as part of a Sec. 351 exchange. The first asset has an adjusted basis of $70,000 and an FMV of $50,000. The second asset has an adjusted basis of $70,000 and an FMV of $150,000. The FMV of the stock received is $180,000, and he also receives $20,000 cash. The realized and recognized gain on the second asset is

• A)$80,000 realized; $20,000 recognized.
• B)$80,000 realized; $15,000 recognized.
• C)$20,000 realized; $10,000 recognized.
• D)$10,000 realized; $10,000 recognized.

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Definitions:

Marginal Utility

The extra contentment a customer obtains by using an additional unit of a product or service.

Total Utility

The aggregate level of satisfaction or benefit that a consumer derives from consuming a particular quantity of goods or services.

Budget Constraint

The limit that the size of a consumer’s income (and the prices that must be paid for goods and services) imposes on the ability of that consumer to obtain goods and services.

Money Income

Refers to the total amount of monetary earnings or receipts accruing to an individual or household, originating from various sources like wages, dividends, and benefits.