Business

Amani Mathis

25 October, 09:19

Kirby and Helen form Red Corporation. Kirby transfers property, the basis of $20,000 and a value of $300,000, for 100 shares in Red Corporation. Helen transfers property, the basis of $40,000 and a value of $280,000, and provides legal services in organizing the corporation. The value of her services is $20,000. In return, Helen receives 100 shares in Red Corporation. With respect to the transfers:

a. Kirby will recognize gain.

b. Helen will not recognize any gain or income.

c. Red Corporation will have a basis of $280,000 in the property it acquired from Helen.

d. Red will have a business deduction of $20,000.

e. None of the above