Explain compensation expense for the value

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Carmen as well as Carlos form White Corporation. Carmen transfers cash of $100000 for 100 shares in White. Carlos transfers property (basis of $20000 and fair market value of $80000) as well as agrees to serve as manager of White Corporation for one year; in return, Carlos receives 100 shares in White. The value of Carlo's services is $20000. White Corporation can subtract $20000 as compensation expense for the value of the services Carlos will render.

Reference no: EM1397676

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