Pricilla formed a corporation and owns all of the stock.She contributed property with a FMV of $60,000 and a basis of $55,000 and she received $10,000 cash from the corporation.Pricilla's taxable gain is:

Question

Quizplus · Accepted Answer

When Pricilla contributed property with a FMV of $60,000 and a basis of $55,000, she realized a gain of $5,000 ($60,000 - $55,000). However, since she received $10,000 cash from the corporation, her realized gain is offset by the cash payment, resulting in a taxable gain of $0. Therefore, the answer is choice C.

Pricilla Formed a Corporation and Owns All of the Stock