Max Transfers the Following Properties to a Newly Created Corporation

question 61

Multiple Choice

Max transfers the following properties to a newly created corporation for $90,000 of stock and $10,000 cash in a transaction that qualifies under Sec.351. Max's recognized gain is

• A)$3,000.
• B)$5,000.
• C)$7,000.
• D)$10,000.

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Definitions:

Equilibrium Price

The market price at which the quantity demanded equals the quantity supplied, leading to market equilibrium.

Purely Competitive Market

A market structure characterized by a large number of small firms, identical products, and free entry and exit, leading to price-taking behavior.

Total Revenue

The total amount of money a company receives from its goods or services over a certain period of time.

Profit-Maximizing Output

The level of production at which a company can achieve the highest possible profit based on its cost structure and the market price of its products.