Joe and Kay Form Gull Corporation

question 44

Multiple Choice

Joe and Kay form Gull Corporation.Joe transfers cash of $250,000 for 200 shares in Gull Corporation.Kay transfers property with a basis of $50,000 and fair market value of $240,000.She agrees to accept 200 shares in Gull Corporation for the property and for providing bookkeeping services to the corporation in its first year of operation.The value of Kay's services is $10,000.With respect to the transfer:

• A)Gull Corporation has a basis of $240,000 in the property transferred by Kay.
• B)Neither Joe nor Kay recognizes gain or income on the exchanges.
• C)Gull Corporation has a business deduction under § 162 of $10,000.
• D)Gull capitalizes $10,000 as organizational costs.
• E)None of the above.

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Definitions:

Identity Achievement

A stage in adolescent development where individuals have explored various options and commitments and have established a coherent sense of identity.

Hippocampus

A region of the brain involved in memory formation, navigation, and the processing of emotional responses.

Prefrontal Cortex

The front part of the frontal lobes of the brain, involved in planning, decision-making, problem-solving, and controlling social behavior.

Neurological Impairment

A reduction in the functional ability of the nervous system, which may affect cognitive functions, motor skills, or sensory perceptions.