Rob and Yi form Bluebird Corporation with the following investments. Each receives 50% of Bluebird's stock. In addition, Yi receives cash of $40,000. One result of these transfers is that Yi has a:
A) Recognized loss of $60,000.
B) Recognized loss of $20,000.
C) Basis of $460,000 in the Bluebird stock (assuming Bluebird reduces its basis in the land to $440,000).
D) Basis of $400,000 in the Bluebird stock (assuming Bluebird reduces its basis in the land to $440,000).
E) None of these.

Question

Rob and Yi form Bluebird Corporation with the following investments.  Each receives 50% of Bluebird's stock. In addition, Yi receives cash of $40,000. One result of these transfers is that Yi has a:
A) Recognized loss of $60,000. 
B) Recognized loss of $20,000. 
C) Basis of $460,000 in the Bluebird stock (assuming Bluebird reduces its basis in the land to $440,000). 
D) Basis of $400,000 in the Bluebird stock (assuming Bluebird reduces its basis in the land to $440,000). 
E) None of these.

Quizplus · Accepted Answer

The Answer of Rob and Yi form Bluebird Corporation with the following investments.  Each receives 50% of Bluebird's stock. In addition, Yi receives cash of $40,000. One result of these transfers is that Yi has a:
A) Recognized loss of $60,000. 
B) Recognized loss of $20,000. 
C) Basis of $460,000 in the Bluebird stock (assuming Bluebird reduces its basis in the land to $440,000). 
D) Basis of $400,000 in the Bluebird stock (assuming Bluebird reduces its basis in the land to $440,000). 
E) None of these.

Rob and Yi Form Bluebird Corporation with the Following Investments