Rick Transferred the Following Assets and Liabilities to Warbler Corporation

question 22

Multiple Choice

Rick transferred the following assets and liabilities to Warbler Corporation. In return, Rick received $75,000 in cash plus 90% of Warbler Corporation's only class of stock outstanding (fair market value of $225,000) .

• A) Rick has a recognized gain of $60,000.
• B) Rick has a recognized gain of $75,000.
• C) Rick's basis in the stock of Warbler Corporation is $270,000.
• D) Warbler Corporation has the same basis in the assets received as Rick does in the stock.
• E) None of the above.

---

Definitions:

Trust

A firm belief in the honesty and reliability of another; confidence developed by dealing openly with others, considering all points of view, keeping promises, and caring about people.

Respect

The admiration and regard for someone or something, often due to their abilities, qualities, or achievements.

Flow

A satisfying psychological state resulting from the confluence of high challenge and high skill, in contrast to states of apathy, anxiety, and boredom. Dimensions of flow include a clear and present purpose, immediate feedback, supreme concentration, a sense of growth, and an altered sense of time.

Tubular Reabsorption

A process in the kidneys where substances are removed from the tubular fluid and returned to the blood.