Finch Corporation Distributes Property (Basis of $225,000, Fair Market Value

question 29

Multiple Choice

Finch Corporation distributes property (basis of $225,000, fair market value of $300,000) to a shareholder in a distribution that is a qualifying stock redemption. The property is subject to a liability of $160,000, which the shareholder assumes. The basis of the property to the shareholder is:

• A) $0.
• B) $140,000.
• C) $225,000.
• D) $300,000.
• E) None of the above.

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Definitions:

Unbilled Consulting Revenue

Unbilled consulting revenue refers to earnings from consulting services that have been delivered but not yet invoiced to the client.

Depreciation

The process of methodically dividing the expense of a physical asset over its estimated useful life.

Prepaid Services

Expenses paid in advance for services which will be received in the future.

Unearned Fees

Income received by a company for services yet to be provided or completed; recognized as a liability until the service is performed.