Kevin and Nicole Form Indigo Corporation with the Following Transfers

question 84

Multiple Choice

Kevin and Nicole form Indigo Corporation with the following transfers: inventory from Kevin (basis of $360,000 and fair market value of $400,000) and improved real estate from Nicole (basis of $320,000 and fair market value of $375,000) .Nicole,an accountant,agrees to contribute her services (worth $25,000) in organizing Indigo.The corporation's stock is distributed equally to Kevin and Nicole.As a result of these transfers:

• A)Indigo can deduct $25,000 as a business expense.
• B)Nicole has a recognized gain of $55,000 on the transfer of the real estate.
• C)Indigo has a basis of $360,000 in the inventory.
• D)Indigo has a basis of $375,000 in the real estate.
• E)None of the above.

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Definitions:

Strategy Maps

A visual representation that outlines the key objectives and their relationships within an organization's strategy, aiding in communication, planning, and execution.

Cause-and-effect Relationships

Connections between actions or events such that one or more are the result of the other or others.

Non-financial Performance

A measure of a company's effectiveness and efficiency in areas not directly related to financial metrics, such as customer satisfaction and employee engagement.

Operational Level

Pertains to the day-to-day activities and decisions within an organization that contribute to its overall performance.