Mandel Transferred Property to His New Corporation in a Section

question 2

True/False

Mandel transferred property to his new corporation in a section 351 transaction. One of the properties transferred was land with a fair market value of $200,000 and a tax basis of $250,000. In all cases, the corporation will always take a tax basis in the land of $200,000 to prevent the "built-in loss" from being transferred from Mandel to the corporation.

---

Definitions:

Decreasing-Cost Industry

An industry where the average cost of production decreases as the industry grows and output increases, often due to economies of scale.

Demand Occurs

The moment at which consumers are willing and able to purchase a good or service at a given price.

Long-Run Equilibrium

A state in which all factors of production and costs are variable, and firms in the industry are earning only normal profits, with no incentive for entry or exit.

Inferior Good

A good or service whose consumption declines as income rises, prices held constant.