Which of the Following Statements Is Correct with Respect to the Formation

question 54

Multiple Choice

Which of the following statements is correct with respect to the formation of a corporation?

• A)The basis of the stock in the hands of the shareholder will be equal to the basis of the property contributed plus any gain recognized minus any boot received.
• B)If the 80% test is met,the transferors may recognize a gain or a loss,depending on the facts and circumstances.
• C)To the corporation,the basis of property received is equal to the basis of the property in the hands of the transferor.
• D)The transferor will record a gain if he or she contributes property subject to a liability.

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Definitions:

Influential

Having the power to have an effect on people or things, or to shape decisions, opinions, and actions.

Caste System

A traditional form of social stratification characterized by hereditary transmission of a lifestyle, occupation, and social status.

Accumulating Wealth

The process of gathering and increasing assets, finances, and property over time, usually for the purpose of personal financial security or prestige.

Capitalist Ideology

A belief system that supports the principles of capitalism, emphasizing private property, free markets, and the profit motive as key to economic development.