Sam and Rebecca form Cheers, Inc. Sam transfers a building in which his adjusted basis is $10,000. The fair market value of the building is $95,000. Rebecca transfers property which in her hands has been inventory, and in which her adjusted basis is $3,000. The fair market value of the inventory is $5,000. Sam receives 95 shares of Cheers common voting stock, and Rebecca receives 5 shares of common voting stock.

Question 6. If Rebecca received 5 shares of nonvoting preferred stock instead of voting common, would she be required to recognize the gain of $2,000?

INCORRECT. Question 6Y1. Who qualifies as a transferor?

Sam.

Rebecca.

Sam and Rebecca.

Neither Sam nor Rebecca.

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