Silvia Transfers to Leaf Corporation a Machine She Had Purchased

question 88

Multiple Choice

Silvia transfers to Leaf Corporation a machine she had purchased a year ago for $50,000. The machine has a $40,000 adjusted basis and a $55,000 FMV on the transfer date. $10,000 in depreciation was claimed by Silvia prior to the transfer. Silvia receives all 1,000 shares of Leaf Corporation stock worth $50,000 and a two-year note with a $5,000 FMV. What is the amount and character of the recognized gain or loss?

• A)$15,000 ordinary income
• B)$15,000 capital gain
• C)$5,000 ordinary income
• D)$5,000 capital gain

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Definitions:

Sleep Cycle

A progression through several stages of NREM and REM sleep, repeating several times throughout a typical night's rest.

Sleepwalks

The act of walking or performing other complex behaviors while in a state of sleep.

Stage

A specific phase or period in a process of development or a sequence of events.

Delta Waves

Slow brain waves typically associated with deep sleep and certain states of brain activity, indicative of restorative processes during sleep.