Roberta and Sally formed the Alder Corporation on October 1, 2019. On the same date, Roberta paid $75,000 cash to Alder Corporation for 1,500 shares of the corporation's common stock. Simultaneously, Sally received 100 shares of Alder Corporation's stock for services rendered. How much should Sally include in her taxable income for 2019, and what will be the basis of her Alder Corporation stock?
$\begin{array}{cc}
\text { Taxable Income } & \text { Basis of Stock } \
\text { a. } \$ 0 & \$ 0 \
\text { b. } \$ 0 & \$ 5,000 \
\text { c. } \$ 5,000 & \$ 0 \
\text { d. } \$ 5,000 & \$ 5,000\\text { e. None of these }
\end{array}$

Question

Roberta and Sally formed the Alder Corporation on October 1, 2019. On the same date, Roberta paid $75,000 cash to Alder Corporation for 1,500 shares of the corporation's common stock. Simultaneously, Sally received 100 shares of Alder Corporation's stock for services rendered. How much should Sally include in her taxable income for 2019, and what will be the basis of her Alder Corporation stock?
 $\begin{array}{cc}
\text { Taxable Income } & \text { Basis of Stock } \
\text { a. } \$ 0 & \$ 0 \
\text { b. } \$ 0 & \$ 5,000 \
\text { c. } \$ 5,000 & \$ 0 \
\text { d. } \$ 5,000 & \$ 5,000\\text { e. None of these }
\end{array}$

Quizplus · Accepted Answer

The Answer of Roberta and Sally formed the Alder Corporation on October 1, 2019. On the same date, Roberta paid $75,000 cash to Alder Corporation for 1,500 shares of the corporation's common stock. Simultaneously, Sally received 100 shares of Alder Corporation's stock for services rendered. How much should Sally include in her taxable income for 2019, and what will be the basis of her Alder Corporation stock?
 $\begin{array}{cc}
\text { Taxable Income } & \text { Basis of Stock } \
\text { a. } \$ 0 & \$ 0 \
\text { b. } \$ 0 & \$ 5,000 \
\text { c. } \$ 5,000 & \$ 0 \
\text { d. } \$ 5,000 & \$ 5,000\\text { e. None of these }
\end{array}$

Roberta and Sally Formed the Alder Corporation on October 1