Carl Transfers Land to Cardinal Corporation for 90% of the Stock

question 17

Multiple Choice

Carl transfers land to Cardinal Corporation for 90% of the stock in Cardinal Corporation worth $20,000 plus a note payable to Carl in the amount of $40,000 and the assumption by Cardinal Corporation of a mortgage on the land in the amount of $100,000. The land, which has a basis to Carl of $70,000, is worth $160,000.

• A) Carl will have a recognized gain on the transfer of $90,000.
• B) Carl will have a recognized gain on the transfer of $30,000.
• C) Cardinal Corporation will have a basis in the land transferred by Carl of $70,000.
• D) Cardinal Corporation will have a basis in the land transferred by Carl of $160,000.
• E) None of the above.

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Money received from work performed, such as wages, salaries, or tips.

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