Beth transfers an asset having an FMV of $200,000 and an adjusted basis of $150,000 to ABC Corporation in a Sec. 351 transaction. Beth receives in exchange ABC common stock having an FMV of $175,000 and Zeus Corporation common stock (a capital asset)having an FMV of $25,000 and a basis of $10,000 to ABC Corporation. ABC Corporation must recognize
A)no gain.
B)a $15,000 capital gain.
C)a $25,000 capital gain.
D)a $50,000 capital gain.

Question

Quizplus · Accepted Answer

ABC Corporation must recognize a $15,000 capital gain, which is the difference between the FMV of the Zeus Corporation stock received ($25,000) and its basis ($10,000).

Beth Transfers an Asset Having an FMV of $200,000 and an Adjusted