On the formation of X Corp, Moustapha transfers land with a basis of $40,000 and a FMV of $60,000 in exchange for 60 shares (60%) of common stock of X Corp, and Ava transfers equipment with a basis of $40,000 and a FMV of $10,000 in exchange for 40 shares (40%). Two months later, pursuant to a prearranged binding agreement, Ava sells all her X Corp stock to Rose for $40,000 cash. What are the tax consequences to Moustapha and Ava of the transfers to X Corp? O $20,000 gain to Moustapha; no gain/loss to Ava O $20,000 gain to Moustapha; $30,000 loss to Ava O No gain/loss to either O No gain/loss to Moustapha; $30,000 loss to Ava

On the formation of X Corp, Moustapha transfers land with a basis of $40,000 and a FMV of $60,000 in exchange for 60 shares (60%) of common stock of X Corp, and Ava transfers equipment with a basis of $40,000 and a FMV of $10,000 in exchange for 40 shares (40%). Two months later, pursuant to a prearranged binding agreement, Ava sells all her X Corp stock to Rose for $40,000 cash. What are the tax consequences to Moustapha and Ava of the transfers to X Corp? O $20,000 gain to Moustapha; no gain/loss to Ava O $20,000 gain to Moustapha; $30,000 loss to Ava O No gain/loss to either O No gain/loss to Moustapha; $30,000 loss to Ava

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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