Jim, Betty, and Bill Form Crow Corporation

question 47

Multiple Choice

Jim, Betty, and Bill form Crow Corporation. Jim and Betty each contribute cash of $500,000, while Bill contributes land (basis of $550,000; fair market value of $600,000) . Each shareholder receives one-third of Crow's stock, and Bill also receives $100,000 in cash. Which, if any, of the following choices is a correct result of the incorporation?

• A)Bill's basis in the Crow stock is $650,000.
• B)Crow Corporation's basis in the land is $550,000.
• C)Crow's basis in the land is $650,000.
• D)Crow's basis in the land is $600,000.
• E)None of the above.

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Definitions:

Activity-Based Costing

An accounting methodology that assigns costs to products and services based on the resources they consume, providing more accurate cost information.

Tech Support

A service provided to assist users in solving technical problems with products or services, often involving troubleshooting and guidance on product features.

Time-Driven

A methodology or approach that bases actions, decisions, or processes on specific timing or scheduling requirements.

Activity-Based Costing

An accounting method that assigns costs to products or services based on the activities they require, aiming for more precise cost allocation.