Adam Transfers Cash of $300,000 and Land Worth $200,000 to Camel

question 83

Multiple Choice

Adam transfers cash of $300,000 and land worth $200,000 to Camel Corporation for 100% of the stock in Camel. In the first year of operation, Camel has net taxable income of $70,000. If Camel distributes $50,000 to Adam:

• A) Adam has taxable income of $50,000.
• B) Camel Corporation has a tax deduction of $50,000.
• C) Adam has no taxable income from the distribution.
• D) Camel Corporation reduces its basis in the land to $150,000.
• E) None of the above.

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Definitions:

Invulnerability

A state or condition of being incapable of being wounded, harmed, or damaged, either physically or emotionally.

Terminal Illness

A disease or condition that is deemed incurable or irreversible and is expected to result in the death of the patient within a short period of time.

Child-Teacher Ratio

The number of children assigned to one teacher, a critical factor influencing the quality of education and individual attention received.

Planned Curriculum

A structured set of educational objectives, materials, and methods that have been designed in advance to achieve specific learning outcomes.