Kathleen Transferred the Following Assets to Mockingbird Corporation

question 37

Multiple Choice

Kathleen transferred the following assets to Mockingbird Corporation. In exchange,Kathleen received 40% of Mockingbird Corporation's only class of stock outstanding.The stock has no established value.However,all parties sincerely believe that the value of the stock Kathleen received is the equivalent of the value of the assets she transferred.The only other shareholder,Rick,formed Mockingbird Corporation five years ago.

• A)Kathleen has no gain or loss on the transfer.
• B)Mockingbird Corporation has a basis of $48,000 in the equipment and $108,000 in the land.
• C)Kathleen has a basis of $256,000 in the stock of Mockingbird Corporation.
• D)Mockingbird Corporation has a basis of $36,000 in the equipment and $144,000 in the land.
• E)None of the above.

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