Rick transferred the following assets and liabilities to Warbler Corporation. Adjusted Basis Fair Market Value Building $210,000 $225,000 Equipment 45,000 75,000 Trucks 15,000 30,000 Mortgage (held for four years) on building 30,000 30,000 In return,Rick received $75,000 in cash plus 90% of Warbler Corporation's only class of stock outstanding (fair market value of $225,000) .
A) Rick has a recognized gain of $60,000.
B) Rick has a recognized gain of $75,000.
C) Rick's basis in the stock of Warbler Corporation is $270,000.
D) Warbler Corporation has the same basis in the assets received as Rick does in the stock.
E) None of the above.
Correct Answer:
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