Shawn Transfers Property (Basis of $40,000 and Fair Market Value

question 82

Multiple Choice

Shawn transfers property (basis of $40,000 and fair market value of $35,000) to Condor Corporation in exchange for § 1244 stock. The transfer qualifies as a nontaxable exchange under § 351; therefore, Shawn's basis in the Condor stock is $40,000. Five years later, Shawn sells the Condor stock for $25,000. With respect to the sale, Shawn has:

• A)An ordinary loss of $15,000.
• B)An ordinary loss of $10,000 and a capital loss of $5,000.
• C)A capital loss of $15,000.
• D)A capital loss of $10,000 and an ordinary loss of $5,000.
• E)None of the above.

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