Hunter and Warren Form Tan Corporation

question 34

Multiple Choice

Hunter and Warren form Tan Corporation. Hunter transfers equipment (basis of $210,000 and fair market value of $180,000) while Warren transfers land (basis of $15,000 and fair market value of $150,000) and $30,000 of cash. Each receives 50% of Tan's stock. As a result of these transfers:

• A) Hunter has a recognized loss of $30,000, and Warren has a recognized gain of $135,000.
• B) Neither Hunter nor Warren has any recognized gain or loss.
• C) Hunter has no recognized loss, but Warren has a recognized gain of $30,000.
• D) Tan Corporation will have a basis in the land of $45,000.
• E) None of the above.

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Definitions:

Just Noticeable Difference (jnd)

The minimum difference in stimulation that a person can detect 50% of the time.

Physical Energy

The capacity to do work, manifesting in forms such as kinetic, potential, thermal, electrical, chemical, and nuclear energy.

Müller's Doctrine

A theory in physiology proposing that the nature of a perception is determined by the neural pathway that sensory input activates, not by the specific stimulus itself.

Specific Nerve Energies

Specific nerve energies is a theory suggesting that different sensory nerves convey specific types of sensory information to the brain, leading to distinct sensory experiences.