Ask Question
23 August, 11:36

Mitchell and Powell form Green Corporation. Mitchell transfers property (basis of $105,000 and fair market value of $90,000) while Powell transfers land (basis of $8,000 and fair market value of $75,000) and $15,000 of cash. Each receives 50% of Green Corporation's stock (total value of $180,000). As a result of these transfers:A. Mitchell has a recognized loss of $15,000, and Powell has a recognized gain of $67,000. B. Neither Mitchell nor Powell has any recognized gain or loss. C. Mitchell has no recognized loss, but Powell has a recognized gain of $15,000. D. Green Corporation will have a basis in the land of $23,000. E. None of the above.

+4
Answers (1)
  1. 23 August, 15:28
    0
    B) Neither Mitchell nor Powell has any recognized gain or loss.

    Explanation:

    Section 351 (a) of the IRS code establishes that when:

    property is transferred to a corporation by a shareholder solely in exchange for stocks of the corporation, and the person (or people) that transferred the property take immediate control of the corporation,

    no gain or loss can be recognized from that transaction.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Mitchell and Powell form Green Corporation. Mitchell transfers property (basis of $105,000 and fair market value of $90,000) while Powell ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers