Kirby and Helen Form Red Corporation

question 58

Multiple Choice

Kirby and Helen form Red Corporation.Kirby transfers property,basis of $20,000 and value of $300,000,for 100 shares in Red Corporation.Helen transfers property,basis of $40,000 and value of $280,000,and provides legal services in organizing the corporation.The value of her services is $20,000.In return Helen receives 100 shares in Red Corporation.With respect to the transfers:

• A)Kirby will recognize gain.
• B)Helen will not recognize gain.
• C)Red Corporation will have a basis of $280,000 in the property it acquired from Helen.
• D)Red will have a business deduction of $20,000.
• E)None of the above.

---

Definitions:

Mortality

A fatal outcome.

Influenza Outbreak

A sudden increase in the occurrence of the influenza virus in a specific area, leading to widespread illness among the population.

Anthrax

A serious infectious disease caused by the bacterium Bacillus anthracis, affecting both animals and humans.

Smallpox

A highly contagious and deadly disease caused by the variola virus, characterized by fever and a distinctive skin rash, eradicated worldwide by 1980.