Tom and George Form Swan Corporation with the Following Investments

question 3

Multiple Choice

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

• A)Tom has no recognized gain; George recognizes gain/income of $80,000.
• B)Neither Tom nor George recognizes gain or income.
• C)Swan Corporation has a basis of $30,000 in the land.
• D)George has a basis of $30,000 in the shares of Swan Corporation.
• E)None of the above.

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Definitions:

Latency Stage

A phase in psychosexual development proposed by Freud, occurring approximately between the ages of 5 and puberty, where sexual urges are repressed.

Sexual Quiescence

A period of sexual inactivity or reduction in sexual desire, which might be natural or due to various psychological or physical factors.

Intellectual Skills

The cognitive abilities related to thinking, reasoning, problem-solving, and learning.

Motor Skills

The abilities required to control the muscles of the body for movement, including both gross and fine motor skills.