Rick Transferred the Following Assets and Liabilities to Warbler Corporation

question 20

Multiple Choice

Rick transferred the following assets and liabilities to Warbler Corporation. In return, Rick received $75,000 in cash plus 90% of Warbler Corporation's only class of stock outstanding (fair market value of $225,000) .

• A)Rick has a recognized gain of $60,000.
• B)Rick has a recognized gain of $75,000.
• C)Rick's basis in the stock of Warbler Corporation is $270,000.
• D)Warbler Corporation has the same basis in the assets received as Rick does in the stock.
• E)None of the above.

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Conference Board of Canada

A Canadian not-for-profit research organization that specializes in analyzing and disseminating economic trends, organizational performance, and public policy issues.

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Conference Board of Canada

An independent research organization that specializes in economic trends, public policy, and organizational performance in Canada.