Rachel owns 100% of the stock of Cardinal Corporation. In the current year Rachel transfers an installment obligation, tax basis of $180,000 and fair market value of $350,000, for additional stock in Cardinal worth $350,000.
a. Rachel has a taxable gain of $180,000.
b. Rachel recognizes no gain on the transfer.
c. Rachel has a taxable gain of $170,000.
d. Rachel has a basis of $350,000 in the additional stock she received in Cardinal Corporation.