Alice and Joe Are Going to Form a Business Entity

question 89

Multiple Choice

Alice and Joe are going to form a business entity. Alice will contribute cash of $200,000 for a 40% ownership interest and Joe will contribute land worth $300,000 (basis of $180,000) for a 60% ownership interest. Which of the following statements is correct?

• A) If the entity is a C corporation, Alice has $0 recognized gain and a basis for her stock of $200,000, and Joe has a recognized gain of $120,000 and a basis for his stock of $300,000.
• B) If the entity is an S corporation, Alice has $0 recognized gain and a basis for her stock of $200,000, and Joe has $0 recognized gain and a basis for his stock of $180,000.
• C) If the entity is a general partnership, Alice has $0 recognized gain and a basis for her partnership interest of $152,000 ($380,000 × 40%), and Joe has $0 recognized gain and a basis for his partnership interest of
• $228,000 ($380,000 × 60%).
• D) Only a. and c. are correct.
• E) a., b., and c. are correct.

---

Definitions:

France

A country located in Western Europe known for its rich history, cultural influence, and contributions to art, philosophy, and cuisine.

Memory Performance

The effectiveness and efficiency with which an individual can retain and recall past experiences, information, or procedures, measured through various cognitive tests.

Organizational Strategies

Memory strategies in which materials to be remembered are mentally grouped into meaningful categories.

Liberian Children

refers to the youth population of Liberia, a country in West Africa, focusing on their social, educational, and health aspects.