Henry Transfers Property with an Adjusted Basis of $90,000 and an FMV

question 35

Multiple Choice

Henry transfers property with an adjusted basis of $90,000 and an FMV of $100,000 to a newly-formed corporation in a Sec. 351 exchange. Henry receives stock with an FMV of $80,000 and a short-term note with a $20,000 FMV. Henry's recognized gain is

• A)$0.
• B)$5,000.
• C)$10,000.
• D)$20,000.

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Definitions:

Extrusion

The process of shaping material by forcing it through a die or similar device, or the expulsion of something from its container.

Anterior Fontanel

The largest soft spot on a baby’s skull which allows for growth of the brain and skull; it usually closes by the age of 18 to 24 months.

Diamond

A naturally occurring crystal form of carbon, known for its extreme hardness, brilliance, and thermal conductivity.

Vernix Caseosa

A waxy or cheese-like white substance found coating the skin of newborn human infants, providing protection.