Walter, Who Owns All of the Ajax Corporation Stock, Purchases

question 76

Multiple Choice

Walter, who owns all of the Ajax Corporation stock, purchases a truck from Ajax Corporation in January. The truck cost $12,000 and has a $10,000 adjusted basis. Walter pays the truck's $8,000 FMV. Later in the same year, Walter sells the truck to an unrelated party for $13,000. With respect to these transactions

• A)Ajax Corporation reports a loss of $2,000 and Walter reports a gain of $5,000.
• B)Ajax Corporation reports no loss and Walter reports a gain of $3,000.
• C)Ajax Corporation reports a loss of $4,000 and Walter reports a gain of $5,000.
• D)Ajax Corporation reports no loss and Walter reports a gain of $5,000.

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Definitions:

Trespass To Land

The entry onto, above, or below the surface of land owned by another without the owner’s permission or legal authorization.

Property Owner

An individual or entity that legally possesses ownership rights over a certain property or piece of land.

Permission

Authorization given by a competent authority to do something that could otherwise be illegal or against the rules.

Libel

The act of publishing false statements that damage a person's reputation.