Jacob and Ashley Form Junco Corporation with the Following Investments

question 50

Multiple Choice

Jacob and Ashley form Junco Corporation with the following investments: ​
Jacob and Ashley each receive one-half of the Junco stock. In addition, Ashley receives cash of $100,000. One of the results of these transfers is:

• A)Jacob has a recognized loss of $100,000.
• B)Ashley has a recognized gain of $300,000.
• C)Junco Corporation has a basis in the land of $400,000.
• D)Ashley's basis in the Junco Corporation stock is $500,000.
• E)None of the above.

---

Definitions:

Vertical Differentiation

The organization of hierarchical levels within an organization or structure, often determining authority, responsibility, and communication flow.

Span of Control

The number of subordinates that a manager or supervisor can effectively oversee, manage, or control directly.

Specialized Knowledge

Expertise or skills developed in a specific field, area, or subject, distinguishing one from general knowledge.

Organizational Hierarchy

The arrangement of individuals within a corporation according to power, status, and job function, creating a structure of ranks or levels.