Rachael and Ray form an equal partnership, R&R, on January 1, 20X1. Rachael contributes $100,000 in exchange for her one-half interest; Ray contributes land worth $100,000. Ray's adjusted basis in the land is $30,000. Which of the following statements is accurate with respect to this exchange?

a. Neither Rachael, Ray, nor R&R recognize any gain or loss on the transfer.

b. Ray recognizes $70,000 gain on the transfer.

c. R&R recognizes $70,000 gain on the transfer.

d. b. and c.

Babb Corporation owns 80 percent of Atley Corporation's stock and Linda owns the remaining 20 percent of Atley's stock. Babb Corporation's basis for its Atley stock is $300,000 and Linda's Atley stock has a basis of $80,000. Pursuant to a plan of complete liquidation of Atley Corporation, Babb Corporation receives property with a $400,000 adjusted basis and a $480,000 fair market value, and Linda receives property with a $130,000 adjusted basis and a $120,000 fair market value. The bases of the properties to Babb Corporation and Linda are:

a. Babb: $480,000; Linda: $120,000

b. Babb: $400,000; Linda: $130,000

c. Babb: $300,000; Linda: $80,000

d. Babb: $400,000; Linda: $120,000

What is the primary goal of the personal holding company tax?

a. Force dividends to be paid.

b. Provide more revenue.

c. Avoid the capital gains tax.

d. Lower the effective tax rates on businesses.