Wade and Paul Form Swan Corporation with the Following Investments

question 1

Multiple Choice

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

• A) Wade has no recognized gain? Paul recognizes income/gain of $80,000.
• B) Neither Wade nor Paul has recognized gain or income on the transfers.
• C) Swan Corporation has a basis of $30,000 in the land transferred by Paul.
• D) Paul has a basis of $30,000 in the 25 shares he acquires in Swan Corporation.
• E) None of the above.

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Definitions:

Sexual Harassment

Behavior that is defined by the EEOC as “Unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature.”

Pornographic Images

Visual material intended to stimulate erotic feelings by depicting sexually explicit subjects and activities.

Interdependence

A relationship in which members of different groups not only must cooperate but also must depend on each other to reach common goals.

Sexual Harassment

Unwelcome or inappropriate sexual remarks or physical advances, typically in a workplace or other professional environment, that create a hostile or offensive work atmosphere.