Sybil Transfers Property with a Tax Basis of $5,000 and a Fair

question 44

Multiple Choice

Sybil transfers property with a tax basis of $5,000 and a fair market value of $6,000 to a corporation in exchange for stock with a fair market value of $3,000 and $2,000 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $1,000 on the property transferred. What is Sybil's tax basis in the stock received in the exchange?

• A) $6,000
• B) $5,000
• C) $4,000
• D) $3,000

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Definitions:

Probability

A measure of the likelihood of a certain event or outcome, expressed as a number between 0 and 1.

Expected Utility Maximizer

An economic concept referring to individuals or entities that make choices under uncertainty to maximize their expected level of satisfaction or utility.

Utility Function

Depicts how different combinations of goods or services generate levels of happiness or utility for a person or household.

Probability

A measure of the likelihood of a specific event or outcome occurring, expressed as a number between 0 and 1.