Wade and Paul Form Swan Corporation with the Following Investments

question 1

Multiple Choice

Wade and Paul form Swan Corporation with the following investments. Wade transfers machinery (basis of $40,000 and fair market value of $100,000) , while Paul transfers land (basis of $20,000 and fair market value of $90,000) and services rendered (worth $10,000) in organizing the corporation. Each is issued 25 shares in Swan Corporation. With respect to the transfers:

• A) Wade has no recognized gain? Paul recognizes income/gain of $80,000.
• B) Neither Wade nor Paul has recognized gain or income on the transfers.
• C) Swan Corporation has a basis of $30,000 in the land transferred by Paul.
• D) Paul has a basis of $30,000 in the 25 shares he acquires in Swan Corporation.
• E) None of the above.

---

Definitions:

Climate Change

Long-term alterations in temperature, precipitation, and other atmospheric conditions on Earth, often attributed to human activity.

Energy Consumption

The amount of energy utilized by processes, systems, or devices, often measured in kilowatt-hours or joules.

Logical Fallacies

Flaws in reasoning that undermine the logic of an argument.

Persuasive

Having the ability to convince or influence others to accept a viewpoint or take a specific action.