Art, an unmarried individual, transfers property with a basis of $130,000 and worth $120,000 to Condor Corporation in exchange for § 1244 stock. The transfer qualifies as a nontaxable exchange under § 351. Because the property is loss property, Condor takes a basis of $120,000 in the property. Five years later, Art sells the Condor stock for $50,000. With respect to the sale, Art has: a. A capital loss of $80,000. b. An ordinary loss of $80,000. c. An ordinary loss of $70,000 and a capital loss of $10,000. d. A capital loss of $30,000 and an ordinary loss of $50,000.
Art, an unmarried individual, transfers property with a basis of $130,000 and worth $120,000 to Condor Corporation in exchange for § 1244 stock. The transfer qualifies as a nontaxable exchange under § 351. Because the property is loss property, Condor takes a basis of $120,000 in the property. Five years later, Art sells the Condor stock for $50,000. With respect to the sale, Art has: a. A capital loss of $80,000. b. An ordinary loss of $80,000. c. An ordinary loss of $70,000 and a capital loss of $10,000. d. A capital loss of $30,000 and an ordinary loss of $50,000.
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 54P
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Transcribed Image Text:Art, an unmarried individual, transfers property with a basis of $130,000 and worth $120,000 to Condor Corporation in exchange for § 1244 stock. The transfer
qualifies as a nontaxable exchange under § 351. Because the property is loss property, Condor takes a basis of $120,000 in the property. Five years later, Art
sells the Condor stock for $50,000. With respect to the sale, Art has:
a. A capital loss of $80,000.
b. An ordinary loss of $80,000.
c. An ordinary loss of $70,000 and a capital loss of $10,000.
d. A capital loss of $30,000 and an ordinary loss of $50,000.
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