Kathleen Transferred the Following Assets to Mockingbird Corporation

question 2

Multiple Choice

Kathleen transferred the following assets to Mockingbird Corporation. In exchange, Kathleen received 40% of Mockingbird Corporation's only class of stock outstanding. The stock has no established value. However, all parties sincerely believe that the value of the stock Kathleen received is the equivalent of the value of the assets she transferred. The only other shareholder, Rick, formed Mockingbird Corporation five years ago.

• A) Kathleen has no gain or loss on the transfer.
• B) Mockingbird Corporation has a basis of $48,000 in the equipment and $108,000 in the land.
• C) Kathleen has a basis of $256,000 in the stock of Mockingbird Corporation.
• D) Mockingbird Corporation has a basis of $36,000 in the equipment and $144,000 in the land.
• E) None of the above.

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Definitions:

Commitment to Task

Commitment to task involves the degree of dedication and responsibility an individual or team displays towards completing a specific job or objective.

Multiplication Key

A key on a keyboard or calculator that is used to perform multiplication operations.

Effectiveness

The degree to which something is successful in producing a desired result; the capability of producing a desired effect or outcome.

Self-Interest

A reference to an individual's actions that are primarily motivated by their own needs, wants, or benefits.