Aiden and Addison Form Dove Corporation with the Following Investments

question 74

Multiple Choice

Aiden and Addison form Dove Corporation with the following investments: From Aiden From Addison
Cash $800,000
Building (basis of $400,000,fair market value of $300,000
$300,000)
Land (basis of $200,000;fair market value of 500,000
$500,000)
Dove issues stock equally to Aiden and Addison.One of the tax consequences of these transfers is:

• A)Dove has a basis in the building of $400,000.
• B)Addison has a recognized loss on the building of $100,000.
• C)Addison has a basis in the Dove stock of $800,000.
• D)Addison has a recognized gain on land of $300,000 but no recognized loss on the building.
• E)None of these.

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Definitions:

Internal Control

Practices and procedures deployed by a company to verify the honesty of its financial and accounting figures, enhance responsibility, and eliminate swindling.

Inventoriable Costs

Direct costs associated with the acquisition or production of goods that are held for sale in the ordinary course of business.

Closing Entries

Closing entries are journaled at the end of an accounting period to transfer the balances in temporary accounts to permanent accounts, thereby resetting the temporary accounts for the next period.

Natural Resources

Natural resources are raw materials that are derived from the environment, such as minerals, forests, water, and fertile land, which can be used for economic gain.