Hazel Transferred the Following Assets to Starling Corporation

question 9

Multiple Choice

Hazel transferred the following assets to Starling Corporation.

In exchange,Hazel received 50% of Starling Corporation's only class of stock outstanding.The stock has no established value.However,all parties sincerely believe that the value of the stock Hazel received is the equivalent of the value of the assets she transferred.The only other shareholder,Rick,formed Starling Corporation five years ago.

• A)Hazel has no gain or loss on the transfer.
• B)Starling Corporation has a basis of $48,000 in the machinery and $108,000 in the land.
• C)Starling Corporation has a basis of $36,000 in the machinery and $144,000 in the land.
• D)Hazel has a basis of $276,000 in the stock of Starling Corporation.
• E)None of the above.

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Definitions:

Proxy Voting

A process that allows shareholders to vote on corporate matters, such as the election of members to the board of directors, without physically attending the meeting.

Shareholder Authority

The legal powers granted to shareholders of a corporation, including voting on corporate matters and electing the board of directors.

Straight Voting

A method of voting on corporate directors where shareholders must vote for each board position separately, often disadvantaging smaller shareholders.

Minority Shareholders

Shareholders who do not have a controlling interest in the company, often holding a smaller portion of the company's equity.