ACCOUNTING TAX

1. Cybele formed a corporation and transferred a building with a basis of $50,000, subject to a $70,000 mortgage, and cash of $15,000 to it for stock. Cybele's basis in her stock and the corporation's basis in the building are:

Stock Building

a. Zero $50,000

b. $15,000 50,000

c. Zero 40,000

d. Zero 55000

2. Crates Corporation's financial income before income taxes for the years was $250,000. Organization costs of $90,000 are being written off over a 10-year period for financial statement purposes. For tax purposes, these costs are being written off over the minimum allowable period. For the year, Creates' taxable income was:

a. $235,000 b. $247,600 c. $250,000 d. $253,000