Ransferred property worth-treatment of transaction

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Reference no: EM13906983

Aaron transferred property worth $75,000 and services worth $25,000 to the BJ Corporation. In exchange, he received stock in BJ valued at $100,000. Immediately after the exchange, Aaron owned 80% of the only class of outstanding stock. Which of the following is true with regard to Aaron’s treatment of this transaction?

Short-term capital gain of $25,000.

Ordinary income of $25,000.

Short-term capital gain of $100,000.

No income until the stock is sold.

Reference no: EM13906983

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