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Choice Corp decides to incorporate one of its divisions. As a result assets with a basis of $ 2 0 0 , 0 0 0

Choice Corp decides to incorporate one of its divisions. As a result assets with a basis of $200,000 but worth $800,000 and liabilties of $325,000 are transferred to a new corportion Prime Inc, in exchange for all its stock. The stock in Prime is then distributed to the shareholders of Choice.

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