Which of the following statements best describes the tax

consequences that arise from a contribution of capital to a corporation

by an existing sole shareholder?

Multiple Choice

The shareholder recognizes a gain or loss yn

the transfer, and the corporation's basis in the

property transferred equals the shareholder's

basis in the property transferred.

The shareholder does not recognize a gain

or loss on the transfer, and the corporation's

basis in the property transferred equals the

shareholder's basis in the property

transferred.

The shareholder does not recognize a gain

or loss on the transferc, and the corporation's

basis in the property transferred equals zero.

The sharehalder recognizes a gain or loss on