Four individuals form Chickadee Corporation under § 351.Two of these individuals,Jane and Walt,made the following contributions: Adjusted Basis Fair Market Value From Jane- Cash $360,000 $360,000 Patent -0- 40,000 From Walt- Equipment (depreciation claimed of $100,000) 240,000 370,000 Both Jane and Walt receive stock in Chickadee Corporation equal to the value of their investments.
A) Jane must recognize income of $40,000;Walt has no income.
B) Neither Jane nor Walt recognize income.
C) Walt must recognize income of $130,000;Jane has no income.
D) Walt must recognize income of $100,000;Jane has no income.
E) None of the above.
Correct Answer:
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