Tom and George Form Swan Corporation with the Following Investments

question 3

Multiple Choice

Tom and George form Swan Corporation with the following investments: Tom transfers machinery worth $100,000 (basis of $40,000) , while George transfers land worth $90,000 (basis of $20,000) and services rendered in organizing the corporation worth $10,000.Each is issued 25 shares in Swan Corporation.With respect to the transfers:

• A)Tom has no recognized gain; George recognizes gain/income of $80,000.
• B)Neither Tom nor George recognizes gain or income.
• C)Swan Corporation has a basis of $30,000 in the land.
• D)George has a basis of $30,000 in the shares of Swan Corporation.
• E)None of the above.

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Definitions:

Ethical Codes

Formalized sets of ethical guidelines developed by some companies for use at all levels of an organization.

Formalized Sets

Established or official groups or collections of objects, rules, or standards that are systematically organized.

Guidelines

Recommended principles or practices that serve as a framework or advice for conduct or action.

Tangible Gain

A clear and measurable benefit or advantage, often of a financial nature.