Amos Contributes Land with an Adjusted Basis of $150,000 and a Fair

question 43

True/False

Amos contributes land with an adjusted basis of $150,000 and a fair market value of $200,000 to White, Inc., an S corporation, in exchange for 50% of the stock of White, Inc. Carol contributes cash of $200,000 for the other 50% of the stock. If White later sells the land for $225,000, $62,500 [$50,000 + 50%($25,000)] is allocated to Amos and $12,500 ($25,000 × 50%) is allocated to Carol.

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Definitions:

Society

An organized group of individuals living together in a structured community with shared laws, traditions, and values.

Economizing Problem

The need to make choices about how to best use limited resources to satisfy unlimited wants.

Limited Resources

The economic principle that the available resources (such as time, money, and raw materials) are insufficient to satisfy all wants and needs.

Unlimited Wants

The economic concept that human desires and needs are infinite and vary in intensity, contrasting with limited available resources.