Arnold Purchases a Building for $750,000 Which Is Going to Be

question 2

Multiple Choice

Arnold purchases a building for $750,000 which is going to be used by his wholly-owned corporation. Which of the following statements are correct?

• A)If Arnold contributes the building to the corporation, there will be no recognition under § 351 and a carryover basis of $750,000.
• B)If Arnold leases the building to the corporation, lease-rental payments of $30,000 per year to Arnold will result in a $30,000 deduction for the corporation.
• C)If Arnold leases the building to the corporation, lease-rental payments of $30,000 per year to Arnold will result in $30,000 of gross income for Arnold.
• D)Leasing the building to the corporation will contribute to the tax avoidance objective of minimizing double taxation.
• E)All of the above are correct.

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Definitions:

Simplify

To make an expression less complex by combining like terms and executing arithmetic operations where possible.

Fraction

A numerical quantity that represents a part of a whole, typically in the form of a numerator divided by a denominator.

Exponent

A number that indicates how many times a base is multiplied by itself.

Fraction

A mathematical expression representing the division of one quantity by another, noted by a numerator divided by a denominator.