Which of the Following Statements Best Describes the Tax Consequences

Multiple Choice

Which of the following statements best describes the tax consequences that arise from a contribution of capital to a corporation by an existing sole shareholder?

A) The shareholder recognizes a gain or loss on the transfer, and the corporation's basis in the property transferred equals its fair market value.
B) The shareholder does not recognize a gain or loss on the transfer, and the corporation's basis in the property transferred equals the shareholder's basis in the property transferred.
C) The shareholder recognizes a gain or loss on the transfer, and the corporation's basis in the property transferred equals the shareholder's basis in the property transferred.
D) The shareholder does not recognize a gain or loss on the transfer, and the corporation's basis in the property transferred equals zero.