Eileen transfers property worth $200,000 (basis of $190,000) to Goldfinch Corporation. In return, she receives 80%...
Eileen transfers property worth $200,000 (basis of $190,000) to Goldfinch Corporation. In return, she receives 80% of the stock in Goldfinch Corporation (fair market value of $180,000) and a long-term note (fair market value of $20,000) executed by Goldfinch and made payable to Eileen. Eileen recognizes gain on the transfer of:
a. $0.
b. $10,000.
c. $20,000.
d. $190,000.
e. None of the above.
Homework Answers
Answer: $10,000
Explanations:
The long term commitment of Goldfinch Corporation establishes boot. In this manner, Eileen gets boot in the measure of $20,000 however will perceive increase just to the degree of the $10,000 acknowledged addition.
Hence, Eileen receives boot in the amount of $20,000 but will recognize gain only to the extent of the $10,000 realized gain
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