Mario and Lupita Form a Corporation in a Transaction Coming

question 83

Multiple Choice

Mario and Lupita form a corporation in a transaction coming under Sec. 351. Lupita transfers property with an adjusted basis of $150,000 and an FMV of $200,000 in exchange for one-half of the stock. The property has an $80,000 mortgage, which the corporation assumes. The corporation's basis in the property is

• A)$200,000.
• B)$150,000.
• C)$80,000.
• D)$130,000.

---

Definitions:

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument, representing the value at which it is issued.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock and often pays dividends.

Cumulative

Refers to the total amount accumulated over a period of time, often used to describe amounts of money or measurements that build up until a specific point is reached.

Par Value

The nominal or face value of a bond, stock, or coupon as stated by the issuer, which may differ from its market value.