CH4_01_Corporate Formation

Question 1

1. Quigley, Roberk, and Storm form a corporation. Quigley exchanges $25,000 of legal fees for 30 shares of stock. Roberk exchanges land with a basis of $10,000 and a fair market value of
   $100,000 for 60 shares of stock. Storm exchanges $10,000 cash for 10 shares of stock. What amount of income should each shareholder recognize?

  Quigley 	  Roberk 	  Storm 
A.	$0	$0	$0
B.	$25,000	$90,000	$0
C.	$25,000	$90,000	$10,000
D.	$0	$90,000	$0

Answer 1

B. $25,000 $90,000 $0

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Question 2

2. Adams, Beck, and Carr organized Flexo Corp. with authorized voting common stock of
   $100,000. Adams received 10% of the capital stock in payment for the organizational services that he rendered for the benefit of the newly formed corporation. Adams did not contribute property to Flexo and was under no obligation to be paid by Beck or Carr. Beck and Carr transferred property in exchange for stock as follows:Adjusted Basis Fair Market Value Percentage of Flexo Stock Acquired
   Beck $ 5,000 $ 20,000 20%
   Carr 60,000 70,000 70%

What amount of gain did Carr recognize from this transaction?

A. $40,000 B. $15,000 C.$10,000 D.$0

Answer 2

D.$0

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해당

Question 3

3. In April, A and B formed X Corp. A contributed $50,000 cash, and B contributed land worth
   $70,000 (with an adjusted basis of $40,000). B also received $20,000 cash from the corporation. A and B each receive 50% of the corporation’s stock. What is the tax basis of the land to X Corp.?

A. $40,000 B. $50,000 C.$60,000 D.$70,000

Answer 3

C.$60,000

Question 4

4. You transfer property with an adjusted basis of $20,000 and a fair market value of $31,000 in exchange for 100% of the stock in a new corporation. You receive 100 shares of stock having a fair market value of $16,000 and $10,000 in cash. The corporation also assumes a $5,000 mortgage on the property. Which of the following is correct?

A. $11,000 gain realized; $0 recognized.
B. $15,000 gain realized; $11,000 recognized.
C.$11,000 gain realized; $10,000 recognized.
D.$10,000 gain realized; $5,000 recognized.

Answer 4

C.$11,000 gain realized; $10,000 recognized.

Question 5

5. In a bona fide transaction, Jesse transferred land worth $50,000 to his 80%-controlled corporation for stock of the corporation worth $20,000 and cash of $20,000. The basis of the property to him was $15,000 and was subject to a $10,000 mortgage, which the corporation assumed. Jesse must report a gain of

A. $15,000 B. $20,000 C.$30,000 D.$35,000

Answer 5

B. $20,000