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 of $20,000, and 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.

The corporation's adjusted tax basis in the transferred truck is:

a) $0 b) $20,000

c) $40,000

d) $50,000

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

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