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

question 53

Multiple Choice

Ashley transfers property with a tax basis of $5,000 and a fair market value of $3,000 to a corporation in exchange for stock with a fair market value of $2,000 and $500 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $500 on the property transferred. What is Ashley's tax basis in the stock received in the exchange?

• A) $5,000
• B) $4,000
• C) $3,000
• D) $2,000

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Definitions:

Transference

A psychological phenomenon where feelings, desires, and expectations from one person are redirected and applied to another.

Gain-loss Theory

A theory suggesting that increases and decreases in the perceived likelihood of reward lead to increases and decreases in attraction and motivation.

Loneliness

The subjective feeling of isolation or disconnection from others, often accompanied by sadness or distress.

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Cultures that emphasize the needs and goals of the individual over the needs and goals of the group.