Gabriella and Juanita Form Luster Corporation

question 73

Multiple Choice

Gabriella and Juanita form Luster Corporation. Gabriella transfers cash of $50,000 for 50 shares of stock, while Juanita transfers information concerning a proprietary process (basis of zero and fair market value of $50,000) for 50 shares of stock.

• A) The transfers to Luster are fully taxable to both Gabriella and Juanita.
• B) Juanita must recognize gain of $50,000.
• C) Because Juanita is required to recognize gain on the transfer, Gabriella also must recognize gain.
• D) Neither Gabriella nor Juanita will recognize gain on the transfer.
• E) None of the above.

---

Definitions:

Ethical Issue

A situation or problem that requires an individual or organization to choose between alternatives that must be evaluated as right or wrong.

Ethics Training

Programs or courses aimed at educating employees or individuals about moral principles and how to apply ethical decision-making in professional settings.

Misconduct

Inappropriate or unlawful behavior by an individual, especially by a professional or an official, contrary to the standards expected of their position or status.

Federal Sentencing Guidelines

A set of rules used by judges in the United States to determine the sentence for a convicted individual, taking into account the nature of the crime and the defendant's criminal history.