In a § 351 Transaction, Gerald Transfers Equipment Worth $85,000

question 61

True/False

In a § 351 transaction, Gerald transfers equipment worth $85,000 (basis of $120,000) in exchange for all of the Rust Corporation stock. Gerald's stock basis is $120,000 and Rust's basis in the equipment is $120,000.

---

Definitions:

Kinetic Energy

Energy of motion. Compare with potential energy.

Legs

Limbs on animals and humans used primarily for supporting the body and facilitating locomotion or movement.

Motion

The change in position of an object with respect to time and its reference point.

Potential Energy

The energy stored by an object due to its position in a force field or its condition.