Rachelle Transfers Property with a Tax Basis of $800 and a Fair

question 67

Multiple Choice

Rachelle transfers property with a tax basis of $800 and a fair market value of $900 to a corporation in exchange for stock with a fair market value of $750 and $50 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $100 on the property transferred. What is the corporation's tax basis in the property received in the exchange?

• A)$900
• B)$850
• C)$800
• D)$750

---

Definitions:

Adverse Selection

A situation in market transactions where asymmetric information results in high-risk parties being more likely to engage in the transaction, often discussed in the context of insurance.

Poverty

Poverty is the condition where an individual or community lacks the financial resources and essentials for a minimum standard of living.

Absolute Terms

Describes quantities or conditions that are not relative or comparative, standing independently on their own.

Relative Terms

Concepts or measurements that are dependent on or compared to another variable or context.