Question

Eileen transfers property worth $200,000 (basis of $190,000) to Goldfinch Corporation. In return, she receives 80% of the stock in Goldfinch Corporation (fair market value of $180,000) and a long-term note (fair market value of $20,000) executed by Goldfinch and made payable to Eileen. Eileen recognizes gain on the transfer of:______.a. $0.b. $10,000.c. $20,000.d. $190,000.e. None of the above.

Answer 1

b. $10,000

Step-by-step explanation:

Calculation to determine Eileen recognizes gain on the transfer

Recognized gain=Basis -Fair market value

Recognized gain=$190,000 -$180,000

Recognized gain=$10,000 gain

Therefore Eileen recognizes gain on the transfer of:$10,000