When Pheasant Corporation Was Formed Under § 351, Kristen Transferred

question 63

Multiple Choice

When Pheasant Corporation was formed under § 351, Kristen transferred property (basis of $26,000 and fair market value of $22,500) for § 1244 stock. Kristen's basis in the Pheasant stock is $26,000. Three years later, Pheasant Corporation goes bankrupt and its stock becomes worthless. Kristen, who is single, owned the stock as an investment. Kristen's loss is:

• A) $26,000 capital.
• B) $22,500 ordinary and $3,500 capital.
• C) $3,500 ordinary and $22,500 capital.
• D) $26,000 ordinary.
• E) None of the above.

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Definitions:

Chebysheff's Theorem

A statistical theorem stating that for any data set or distribution, no matter the shape, a minimum proportion of values must lie within a certain number of standard deviations from the mean.

Standard Deviation

A measure of the amount of variation or dispersion in a set of values, indicating how spread out the values are around the mean.

Sales Receipts

Documents that provide proof of a transaction between a buyer and a seller.

Geometric Mean

The geometric mean is a measure of central tendency that is calculated by taking the nth root of the product of n numbers, often used for rates and ratios.