Sarah and Tony (Mother and Son) Form Dove Corporation with the Following

question 30

Multiple Choice

Sarah and Tony (mother and son) form Dove Corporation with the following investments: cash by Sarah of $55,000; land by Tony (basis of $35,000 and fair market value of $45,000) . Dove Corporation issues 200 shares of stock, 100 each to Sarah and Tony. Thus, each receives stock in Dove worth $50,000.

• A) Section 351 cannot apply since Sarah should have received 110 shares instead of only 100.
• B) As a result of the transfer, Tony recognizes a gain of $10,000.
• C) Tony's basis in the stock of Dove Corporation is $50,000.
• D) Section 351 may apply because stock need not be issued to Sarah and Tony in proportion to the value of the property transferred.
• E) None of the above.

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Definitions:

SA Node

The sinoatrial node, a group of cells in the right atrium of the heart that acts as a natural pacemaker by initiating the heart's electrical impulses.

Purkinje Fibers

Specialized conducting fibers located in the heart's ventricles that help regulate the heart's rhythm.

Heart Skeleton

Fibrous connective tissue that provides a point of attachment for cardiac muscle cells, electrically insulates the atria from the ventricles, and forms the fibrous rings around the valves.

Electrical Insulation

Materials or systems that prevent the passage of electrical current, used to protect, isolate, and contain electrical conductors.