Nigel and Frank Form NFS, Inc

question 52

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 Nigel's basis in his stock?

• A)$70,000
• B)$90,000
• C)$100,000
• D)$120,000
• E)$160,000

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Definitions:

Predetermined Limits

Boundaries or constraints set in advance to define the scope or extent of an action or project.

Chain of Command

A formal line of authority within an organization, which dictates the pathway for communication and decision-making.

Planned Configuration

A deliberate arrangement or design of components, systems, or structures, often in strategic planning or organizational development.

Lines of Authority

This refers to the formal chain of command within an organization, detailing who reports to whom.