Which of the Following Statements Best Describes the Tax Consequences

question 79

Multiple Choice

Which of the following statements best describes the tax consequences that arise from a contribution of capital to a corporation by an existing sole-shareholder?

• A) The shareholder recognizes gain and loss on the transfer and the corporation's basis in the property transferred equals its fair market value.
• B) The shareholder does not recognize gain and loss on the transfer and the corporation's basis in the property transferred equals the shareholder's basis in the property transferred.
• C) The shareholder recognizes gain and loss on the transfer and the corporation's basis in the property transferred equals the shareholder's basis in the property transferred.
• D) The shareholder does not recognize gain and loss on the transfer and the corporation's basis in the property transferred equals zero.

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Definitions:

Germ Layer

One of the three primary layers of cells (ectoderm, mesoderm, and endoderm) in the early embryo from which all tissues and organs develop.

Chorion

The outermost fetal membrane in mammals, including humans, contributing to the formation of the placenta.

Ectopic Pregnancy

A pregnancy in which the fertilized egg implants outside the uterus, often in the fallopian tube, and is non-viable.

Embryo Transfer

A step in assisted reproduction where an embryo is placed into the uterus of a female with the intent of establishing a pregnancy.