IPM Inc. and Zeta Company formed IPeta Inc. by transferring business assets in exchange for 1,000 shares of IPeta common stock. IPM transferred assets with a $675,000 FMV and a $283,000 adjusted tax basis and received 600 shares. Zeta transferred assets with a $450,000 FMV and a $98,000 adjusted tax basis and received 400 shares. Which of the following statements is false?

Question

Quizplus · Accepted Answer

The statements given are all true based on the information provided. A) correctly reflects the value of IPM's shares based on the fair market value (FMV) of the assets transferred. B) accurately calculates Zeta's realized gain as the difference between the FMV of the assets transferred ($450,000) and their adjusted tax basis ($98,000). C) is true because, under certain conditions, the exchange of stock for assets can be a nontaxable event for the corporation receiving the assets.

IPM Inc and Zeta Company Formed IPeta Inc