Rob and Fran Form Bluebird Corporation with the Following Investments

question 15

Multiple Choice

Rob and Fran form Bluebird Corporation with the following investments. Adjusted Basis Fair Market Value From Rob- Cash $400,000 $400,000 From Fran- Land 500,000 440,000 ​ Each receives 50% of Bluebird's stock.In addition,Fran receives cash of $40,000.One result of these transfers is that Fran has a:

• A)Recognized loss of $60,000.
• B)Recognized loss of $20,000.
• C)Basis of $460,000 in the Bluebird stock (assuming Bluebird reduces its basis in the land to $440,000).
• D)Basis of $400,000 in the Bluebird stock (assuming Bluebird reduces its basis in the land to $440,000).
• E)None of the above.

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