Which of the Following Statements Best Describes the Tax Consequences

question 19

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 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.

---

Definitions:

Opportunity Costs

The cost of forgoing the next best alternative when making a decision or choosing between options.

Production Possibilities Frontier (PPF)

A curve depicting the maximum output possibilities for two goods, given a set of inputs and technology, illustrating the trade-offs in production choices.

Legal Reform

The process of examining existing laws and making modifications or amendments to improve justice or efficiency.

Productivity

A measure of the efficiency of production, often evaluated as the ratio of output to inputs in the manufacturing process.