Rob and Fran form Bluebird Corporation with the following investments.

Each receives 50% of Bluebird's stock.In addition,Fran receives cash of $40,000.One result of these transfers is that Fran has a:
A)Recognized loss of $60,000.
B)Recognized loss of $20,000.
C)Basis of $460,000 in the Bluebird stock (assuming Bluebird reduces its basis in the land to $440,000).
D)Basis of $400,000 in the Bluebird stock (assuming Bluebird reduces its basis in the land to $440,000).
E)None of the above.

Question

Rob and Fran form Bluebird Corporation with the following investments.
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Each receives 50% of Bluebird's stock.In addition,Fran receives cash of $40,000.One result of these transfers is that Fran has a:
A)Recognized loss of $60,000. 
B)Recognized loss of $20,000. 
C)Basis of $460,000 in the Bluebird stock (assuming Bluebird reduces its basis in the land to $440,000). 
D)Basis of $400,000 in the Bluebird stock (assuming Bluebird reduces its basis in the land to $440,000). 
E)None of the above.

Quizplus · Accepted Answer

The Answer of Rob and Fran form Bluebird Corporation with the following investments.
​

Each receives 50% of Bluebird's stock.In addition,Fran receives cash of $40,000.One result of these transfers is that Fran has a:
A)Recognized loss of $60,000. 
B)Recognized loss of $20,000. 
C)Basis of $460,000 in the Bluebird stock (assuming Bluebird reduces its basis in the land to $440,000). 
D)Basis of $400,000 in the Bluebird stock (assuming Bluebird reduces its basis in the land to $440,000). 
E)None of the above.

Rob and Fran Form Bluebird Corporation with the Following Investments