Mitchell and Powell Form Green Corporation

question 56

Multiple Choice

Mitchell and Powell form Green Corporation. Mitchell transfers property (basis of $105,000 and fair market value of $90,000) while Powell transfers land (basis of $8,000 and fair market value of $75,000) and $15,000 of cash. Each receives 50% of Green Corporation's stock (total value of $180,000) . As a result of these transfers:

• A) Mitchell has a recognized loss of $15,000, and Powell has a recognized gain of $67,000.
• B) Neither Mitchell nor Powell has any recognized gain or loss.
• C) Mitchell has no recognized loss, but Powell has a recognized gain of $15,000.
• D) Green Corporation will have a basis in the land of $23,000.
• E) None of the above.

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Definitions:

Express Contract

An agreement with terms explicitly stated by the parties involved, either orally or in writing.

Contract Status

The current legal state or condition of a contract, including whether it is active, pending, or terminated.

Illegal Services

Services that are prohibited by law, such as those that involve criminal activities or violate regulations.

Quota

A fixed share or a target that has to be met, often used in the context of sales, production, or immigration.