Reference no: EM132669245

Problem 1: Monk, a sole proprietor, forms a C corporation and transfers property with an adjusted basis of $140,000 and fair market value of $260,000. Monk is the sole owner of the corporation. What amount of gain must Monk recognize in the year he transfers the property?

Option 1: 120,000

Option 2: $260,000

Option 3: $0

Option 4: $140,000

Problem 2: Based on the facts in the question #1 above, what is Monk's basis in the corporation's stock?

Option 1: $0

Option 2: $260,000

Option 3: $140,000

Option 4: $120,000

Problem 3: Based on the facts in question #1 above, what is the corporation's basis in the property transferred by Monk?

Option 1: $120,000

Option 2: $260,000

Option 3: $0

Option 4: $140,000

Problem 4: Based on the facts in question #1 above, if the property transferred was subject to a $60,000 mortgage that was assumed by the corporation, what is Monk's basis in the corporation's stock?

Option 1: $0

Option 2: $60,000

Option 3: $80,000

Option 4: $140,000