Zeppo and Harpo Are Equal Owners of the Marx Corporation

question 12

Multiple Choice

Zeppo and Harpo are equal owners of the Marx Corporation. During the current year, they agree to admit Groucho as a shareholder. Groucho will contribute $35,000 in cash and property worth $75,000 (adjusted basis of $55,000) for 40% of Marx Corporation's stock. How much gain will Groucho recognize from the transfer of the assets to the corporation?

• A)$-0-
• B)$20,000
• C)$35,000
• D)$55,000
• E)$75,000

---

Definitions:

Import Tariffs

Taxes imposed by a government on goods and services imported into a country, used to control trade and protect domestic industries.

Global Demand

The total demand for a product or service across all countries and regions around the world.

Liability of Foreignness

This concept describes the challenges and additional costs that companies face when entering and operating in foreign markets, as opposed to their home countries.

Ethnicities

Refers to categories of identity based on cultural traditions, language, and ancestral origins.