Jerry Transfers Two Assets to a Corporation as Part of a Sec

question 93

Multiple Choice

Jerry transfers two assets to a corporation as part of a Sec. 351 exchange. The first asset has an adjusted basis of $70,000 and an FMV of $50,000. The second asset has an adjusted basis of $70,000 and an FMV of $150,000. The FMV of the stock received is $180,000, and he also receives $20,000 cash. The realized and recognized gain on the second asset is

• A)$80,000 realized; $20,000 recognized.
• B)$80,000 realized; $15,000 recognized.
• C)$20,000 realized; $10,000 recognized.
• D)$10,000 realized; $10,000 recognized.

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Definitions:

Improved Technology

Advances in scientific knowledge and techniques that enhance the efficiency of production processes, leading to higher output with the same or fewer inputs.

Cerumen

A technical term for earwax, a substance produced by glands in the ear canal that protects the ears from dust, microorganisms, and other foreign particles.

Eardrum

A thin membrane that separates the outer ear from the middle ear, vibrating in response to sound waves.

Incus

A small anvil-shaped bone in the middle ear that helps transmit sound vibrations from the outer ear to the inner ear.