Mr. Fingula transfers property to a corporation owned by his daughter. In which of the following situations do the indirect gift rules apply?
A)The property is transferred to the corporation at an elected amount that is equal to the fair market value of the asset and the consideration.
B)The property has a fair market value that exceeds the greater of the fair market value of the consideration received and the elected value.
C)The property has a fair market value that is less than the greater of the fair market value of the consideration received and the elected value.
D)The property is transferred to the corporation at an elected amount that is less than the fair market value and Mr. Fingula receives consideration equal to the fair market value.

Question

Quizplus · Accepted Answer

The indirect gift rules apply when property is transferred to a corporation for consideration that is less than the fair market value of the property. Option B states that the fair market value of the property exceeds the greater of the fair market value of the consideration or the elected value, which triggers the indirect gift rules. Options A and D state that the consideration is equal to or greater than the fair market value, so the indirect gift rules do not apply. Option C states that the fair market value of the property is less than the consideration or the elected value, so there is no indirect gift.

Mr Fingula Transfers Property to a Corporation Owned by His