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Skip To ContentDashboardAccountDashboardCoursesCalendar1 unread message1InboxHelpHurricaneInfoResourcesTAX4011 100 13412QuizzesFirst TestFall 2019
HomeAnnouncementsSyllabusModulesGradesHonorlockFollett DiscoverBadgesCisco WebexFirst TestDueSep 28 at 11:59pmPoints200Questions20Availableafter Sep 22 at 12amTime Limit180 MinutesInstructions
Attempt HistoryAttemptTimeScoreLATESTAttempt 194 minutes80 out of 200Score for this quiz: 80out of 200Submitted Oct 30 at 10:22pmThis attempt took 94 minutes.Question 10 / 10 ptsAaron transferred property worth $78,000 and services worth $22,000 to the BJ Corporation. In exchange, he received stock in BJ valued at $100,000. Immediately after the exchange, Aaron owned 80% of the only class of outstanding stock. Which of the following is true with regard to Aaron’s treatment of this transaction?Correct AnswerOrdinary income of $22,000.Short-term capital gain of $100,000.Short-term capital gain of $25,000.You AnsweredNo income until the stock is sold.The general rule of Sec. 351 is that no gain or loss is recognized if one or more persons transfer property to a corporation solely for stock and if immediately after the exchange such person or persons are in control of the corporation (i.e., own at least 80% of the stock). Sec. 351(d) states, however,that stock issued for services is not issued in return for property. Stock issuedfor services falls outside the general rule, and income must be recognized onsuch a transfer. The fair market value of stock received for services ($22,000) must be included in Aaron’s income. All other stock received was in exchange for property, and no gain or loss is recognized on its transfer.Question 2
10 / 10 ptsDonna exchanges property having an $18,000 adjusted basis and a $35,000 fair market value for 70 shares of the newly created Table Corporation stock. Evelyn exchanges legal services worth $15,000 for the remaining 30 shares of Table’s stock. Which of the following is true?