Max transfers the following properties to a newly created corporation for $90,000 of stock and $10,000 cash in a transaction that qualifies under Sec.351. $$\begin{array} { | c | c | c | c | }
\hline & \text { Asset One } & \text { Asset Two } & \text { Asset Three } \
\hline \text { FMV } & \$ 30,000 & \$ 45,000 & \$ 25,000 \
\text { Basis } & 35,000 & 40,000 & 20,000 \
\hline
\end{array}$$ Max's recognized gain is
A)$3,000.
B)$5,000.
C)$7,000.
D)$10,000.

Question

Max transfers the following properties to a newly created corporation for $90,000 of stock and $10,000 cash in a transaction that qualifies under Sec.351. $$\begin{array} { | c | c | c | c | } 
\hline & \text { Asset One } & \text { Asset Two } & \text { Asset Three } \
\hline \text { FMV } & \$ 30,000 & \$ 45,000 & \$ 25,000 \
\text { Basis } & 35,000 & 40,000 & 20,000 \
\hline
\end{array}$$ Max's recognized gain is
A)$3,000.
B)$5,000.
C)$7,000.
D)$10,000.

Quizplus · Accepted Answer

The Answer of Max transfers the following properties to a newly created corporation for $90,000 of stock and $10,000 cash in a transaction that qualifies under Sec.351. $$\begin{array} { | c | c | c | c | } 
\hline & \text { Asset One } & \text { Asset Two } & \text { Asset Three } \
\hline \text { FMV } & \$ 30,000 & \$ 45,000 & \$ 25,000 \
\text { Basis } & 35,000 & 40,000 & 20,000 \
\hline
\end{array}$$ Max's recognized gain is
A)$3,000.
B)$5,000.
C)$7,000.
D)$10,000.

Max Transfers the Following Properties to a Newly Created Corporation