Rose and Wayne Form a New Corporation

question 54

Multiple Choice

Rose and Wayne form a new corporation. Rose contributes cash for 85% of the stock and Wayne contributes services for 15% of the stock. The tax effect is

• A)Rose and Wayne must recognize their realized gains, if any.
• B)Wayne must report the FMV of the stock received as capital gain.
• C)Rose and Wayne are not required to recognize their realized gains.
• D)Wayne must report the FMV of the stock received as ordinary income.

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Definitions:

Affect Security

Refers to the impact that various factors can have on the security of systems, such as changes in software configurations or user permissions that could weaken defenses.

Device Manager

A Windows operating system feature that allows users to view and control the hardware attached to the computer.

Installed Devices

Hardware components that have been set up and configured to work with a computer system or network.

User Account Control

A security component in Windows operating systems that helps prevent unauthorized changes to the system by prompting for permission.