In 2021, Kristina Danielson incorporated her catering business. No liabilities were transferred. Kristina’s only asset that was transferred to the corporation was a delivery truck with an adjusted tax basis offend a fair market value of $40,000. Kristina’s friend Andrew Moldova invested in the corporation by contributing $10,000 of cash. Immediately after the transfer, Kristina owned 80% of the corporation’s stock, and Andrew owned 20% of the corporation’s stock.
12. The corporation’s adjusted tax basis in the transferred truck is:
a) $0
b) $20,000
c) $40,000
d) $50,000
13. What is Kristina’s gain on the transfer of the truck to the corporation?
a) $0
b) $10,000
c) $20,000
d) Kristina recognizes a loss on the transfer
14. Kristina’s adjusted tax basis in the corporation’s stock received in exchange for the
truck is:
a) $0
b) $20,000
c) $40,000
d) $50,000