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6. When Pheasant Corporation was formed under $ 351, Kristen transferred property (basis of $26,000 and fair market value of $22,500) for § 1244 stock. Kristen's basis in the Pheasant stock is $26,000. Three years later, Pheasant Corporation goes bankrupt and its stock becomes worthless. Kristen, who is single, owned the stock as an investment. Kristen's loss is: a. $26,000 capital. b. $22,500 ordinary and $3,500 capital. c. $3,500 ordinary and $22,500 capital. d. $26,000 ordinary. e. None of the above.

6. When Pheasant Corporation was formed under $ 351, Kristen transferred property (basis of $26,000 and fair market value of $22,500) for § 1244 stock. Kristen's basis in the Pheasant stock is $26,000. Three years later, Pheasant Corporation goes bankrupt and its stock becomes worthless. Kristen, who is single, owned the stock as an investment. Kristen's loss is: a. $26,000 capital. b. $22,500 ordinary and $3,500 capital. c. $3,500 ordinary and $22,500 capital. d. $26,000 ordinary. e. None of the above.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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6. When Pheasant Corporation was formed under § 351, Kristen transferred property (basis of $26,000 and fair market value of $22,500) for § 1244 stock. Kristen's basis in the Pheasant stock is $26,000. Three years later, Pheasant Corporation goes bankrupt and its stock becomes worthless. Kristen, who is single, owned the stock as an investment. Kristen's loss is: a. $26,000 capital. b. $22,500 ordinary and $3,500 capital. c. $3,500 ordinary and $22,500 capital. d. $26,000 ordinary. e. None of the above.
Transcribed Image Text:6. When Pheasant Corporation was formed under § 351, Kristen transferred property (basis of $26,000 and fair market value of $22,500) for § 1244 stock. Kristen's basis in the Pheasant stock is $26,000. Three years later, Pheasant Corporation goes bankrupt and its stock becomes worthless. Kristen, who is single, owned the stock as an investment. Kristen's loss is: a. $26,000 capital. b. $22,500 ordinary and $3,500 capital. c. $3,500 ordinary and $22,500 capital. d. $26,000 ordinary. e. None of the above.
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