During 2018, Jimmy Incorporates His Data Processing Business $\text { What will be the basis of the assets to the corporation after the transfer? }$

question 8

Short Answer

During 2018, Jimmy incorporates his data processing business. Jimmy is the sole shareholder. The following assets are transferred to the corporation:
$$\begin{array}{l}\begin{array} { l c } \text { Cash } & \$ 2,000 \\\text { Computer Equipment: } & \\\text { Fair market value } & 20,000 \\\text { Adjusted basis } & 12,000 \\\text { Original cost } & 24,000 \\\text { Furniture: } & \\\text { Fair market value } & 20,000 \\\text { Adjusted basis } & 32,000 \\\text { Original cost } & 64,000\end{array}\\\end{array}$$

$\text { What will be the basis of the assets to the corporation after the transfer? }$

$\begin{array} { c c c } \text { Computer Equipment } & \text { Furniture } \\\end{array}$
A) $\begin{array} { c c c } &&\$ 20,000 & &&&& \$ 20,000 \\\end{array}$
B) $\begin{array} { c c c } &&\$ 12,000 &&&& & \$ 20,000 \\\end{array}$
C) $\begin{array} { c c c } &&\$ 20,000 &&&&& \$ 32,000 \\\end{array}$
D) $\begin{array} { c c c }&& \$ 12,000 &&&&& \$ 32,000\end{array}$

• A)\(\begin{array} { c c c } &&\$ 20,000 & &&&& \$ 20,000 \\\end{array}\)
• B)\(\begin{array} { c c c } &&\$ 12,000 &&&& & \$ 20,000 \\\end{array}\)
• C)\(\begin{array} { c c c } &&\$ 20,000 &&&&& \$ 32,000 \\\end{array}\)
• D)\(\begin{array} { c c c }&& \$ 12,000 &&&&& \$ 32,000
• \end{array}\)

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Definitions:

Economy

A framework for creating, distributing, and utilizing goods and services in a specific geographic region.

Economic Growth

A boost in the purchasing power adjusted market value of goods and services an economy creates over time.

Long Run

A period in economics sufficient for all markets to adjust, including production facilities and labor.

Capital

A resource, either financial or physical, that is employed with the aim of generating wealth through investment or production.