On his way to bankruptcy court to file a voluntary petition in bankruptcy, Sam purchased, at fair market value, a ring for $200. Sam's liabilities exceeded his assets at the time of the purchase. The purchase:

Question

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The purchase of the ring at fair market value is not a preferential transfer. Preferential transfers occur when a debtor makes a payment or transfer of their property to a creditor within 90 days prior to filing for bankruptcy, with the intent of giving that creditor an unfair advantage over other creditors. Since Sam purchased the ring at fair market value and did not intend to give any particular creditor an unfair advantage, this is not a preferential transfer.

On His Way to Bankruptcy Court to File a Voluntary