Felix Transfers Land with a FMV of $900,000 to a Newly

question 10

Multiple Choice

Felix transfers land with a FMV of $900,000 to a newly formed corporation in exchange for all of the stock.The land has a basis of $300,000 and debt of $500,000.The basis of the land,in the hands of the corporation is:

• A)$600,000.
• B)$500,000.
• C)$300,000.
• D)$900,000.

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Definitions:

Incentive

A reward or benefit that motivates or encourages a specific action or behavior.

Tradable Pollution Permits

A market-based approach to controlling pollution by allocating permits that allow the holder to emit a certain amount of pollution, which can be traded among companies.

Emissions

The act of releasing substances, especially pollutants, into the atmosphere or environment.

Government

An organized system that establishes and enforces rules and institutions to govern a community, region, or country.