Tax Accounting Review

7) Loren and Tanya, sisters, each own 50% of a closely held corporation. They contributed the jointly beld securities with a basis of $10,000 and a value of $20,000 to their corporation in exchange for additional stock. Two weeks prior to the contribution, the sisters took out a bank loan for $8,000 using the securities as collateral and the corporation assumed the loan on the transfer. The funds were used to finance a weeklong family retreat at a resort area. Which of the following statement is true? A) The sisters do not have a recognized gain on this contribution and have a total basis in the new stock of #10,000 B) The sisters do not have a recognized gain on this contribution and have a total basis in the new stock of #2,000 C) The sisters have a recognized gain of $8,000 on this contribution and have a total basis in the new stock of #10,000 D) The sisters have a recognized gain of $10,000 on this contribution and have a total basis in the new stock of #20,000