Wade and Paul Form Swan Corporation with the Following Investments

question 1

Multiple Choice

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

• A) Wade has no recognized gain? Paul recognizes income/gain of $80,000.
• B) Neither Wade nor Paul has recognized gain or income on the transfers.
• C) Swan Corporation has a basis of $30,000 in the land transferred by Paul.
• D) Paul has a basis of $30,000 in the 25 shares he acquires in Swan Corporation.
• E) None of the above.

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Definitions:

Blind Test

A type of experiment or evaluation where information about the test, such as the identity of the subjects or the product being tested, is withheld from participants to eliminate bias.

Economic Utility

The value or benefit a consumer receives from using a product or service, contributing to their overall satisfaction.

Job Candidate

An individual applying for or being considered for employment in a specific position within a company.

Reliability

The level at which a measurement instrument yields reliable and steady outcomes consistently.