Nigel and Frank Form NFS, Inc

question 80

Multiple Choice

Nigel and Frank form NFS, Inc. an electing S corporation, by combining the assets of their respective businesses. Nigel contributes $10,000 and assets worth $90,000 (adjusted basis of $60,000) for a 1/3 interest. Frank contributes $90,000 and assets worth $270,000 (adjusted basis of $150,000) for a 2/3 interest. NFS also assumes $60,000 of debt on Frank's assets. What is Frank's basis in his stock?

• A)$180,000
• B)$220,000
• C)$240,000
• D)$300,000
• E)$360,000

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Definitions:

Price Fixing

A practice where competitors agree on selling prices rather than letting competition in the market determine them, often illegal.

Antitrust Policy

Regulations and laws put in place to prevent monopolies, promote competition, and protect consumers from unfair business practices.

Treatment

An intervention or set of interventions, typically in a medical or psychological context, designed to address a health problem or disorder.

Tying Contracts

Agreements where the sale of one product is conditional on the purchase of another product.