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1. A, B, and C decided to organize the ABC Corporation with the following investments: A...
Three individuals form ABC Corporation with the following contributions: Cliff, cash of $50,000 for 50 shares;...
Three individuals form ABC Corporation with the following contributions: Cliff, cash of $50,000 for 50 shares; Brad, land worth $20,000 (basis of $11,000) for 20 shares; and Ron, cattle worth $9,000 (basis of $6,000) for 9 shares and services worth $21,000 for 21 shares. Which of the following statements is correct? A. These transfers are fully taxable and not subject to § 351. B. Ron’s basis in his stock is $27,000. C. Ron’s basis in his stock is $6,000. D....
Wayne and Paul form ABC Corporation with the following investments. Wayne transfers machinery (basis of $40,000...
Wayne and Paul form ABC Corporation with the following investments. Wayne transfers machinery (basis of $40,000 and fair market value of $100,000), while Paul transfers land (basis of $20,000 and fair market value of $90,000) and services rendered (worth $10,000) in organizing the corporation. Each is issued 25 shares in ABC Corporation. With respect to the transfers: A. Wayne has no recognized gain; Paul recognizes income/gain of $80,000. B. Neither Wayne nor Paul has recognized gain or income on the...
In each of the problems below please describe the tax consequences to the parties involved in...
In each of the problems below please describe the tax consequences to the parties involved in the transaction. The answer should include an analysis of whether Section 351 applies to the transaction (unless the problem already states that Section 351 applies) and the computations for any recognized gain, the tax basis of any stock received by the shareholders; the tax basis of any property received by the corporation and the holding period of the stock/property. 1. On January 1, 2019...
ack contributes the following to ABC corporation in a §351 exchange: (1) real property with a...
ack contributes the following to ABC corporation in a §351 exchange: (1) real property with a basis of 400,000 and a fair market value of $800,000, with a $200,000 mortgage attached to it and (2) a personal loan for $20,000. How much income does Jack recognize on the transaction? A. $0 B. $20,000 C. $220,000 D. $400,000
Three individuals form Skylark Corporation with the following contributions: Cliff, cash of $50,000 for 50 shares:...
Three individuals form Skylark Corporation with the following contributions: Cliff, cash of $50,000 for 50 shares: Brad Land worth $20,000 (basis of $11,000) for 20 shares; and Ron, cattle worth $9,000 (basis of $6,000) for 9 shares and services worth $21,000 for 21 shares a. Brad's basis in his stock is $20,000. b. Ron's basis in his stock is $27,000. c. These transfers are fully taxable and not subject to $ 351. d. Ron's basis in this stock is $6,000....
QUESTION 1 Alley, Bob, and Cain form ABC Corporation by transferring the following: From = Transferor...
QUESTION 1 Alley, Bob, and Cain form ABC Corporation by transferring the following: From = Transferor Property Transferred Services Transferred Stock Received Alley Equipment $40,000 $40,000 Bob Land $38,000 $0 $38,000 Cain $0 $22,000 $22,000 Would the above transfer qualify A and B for nonrecognition of gain or loss under Code Sec. 351? Why?
ORGANIZATION OF A CORPORATION: SECTION 351 and RELATED PROBLEMS 3B Boot; Basis; Debt; “Midstream” Issues (1)(a)...
ORGANIZATION OF A CORPORATION: SECTION 351 and RELATED PROBLEMS 3B Boot; Basis; Debt; “Midstream” Issues (1)(a) Section 351(a) applies. Upon exchange with X, (1) A’s amount realized is $100; (2) A’s gain realized is $60; (3) nothing is recognized, because of § 351(a); (4) A’s basis in stock received is $40 under § 358(a)(1); (5) A’s holding period in the stock tacks under § 1223(1); (6) X’s basis in property is $40 under § 362(a)(1); (7) X’s holding period for...
Janet, Carol, Eva, and Wendy incorporate their law practice ("Shysters-R-Us, Inc.") with the following investments: A)...
Janet, Carol, Eva, and Wendy incorporate their law practice ("Shysters-R-Us, Inc.") with the following investments: A) Janet contributes her copyright (basis of $60,000 and FMV of $144,000) for 9400 shares of Shyster stock, worth $98,000. The corporation also assumed her $46,000 of business debts. B) Carol contributes her real estate (basis of $783,000, FMV of $664,000) in exchange for 9700 shares of Shyster stock, worth $575,000, and received $224,000 cash. C) Eva contributes her patent (basis of $260,000, FMV of...
In the current year, Mick, Hank, and Lulu form Hades Corporation Mick contributes land (a capital...
In the current year, Mick, Hank, and Lulu form Hades Corporation Mick contributes land (a capital asset) having a $125,000 FMV in exchange for 145 shares of Hades stock. Ho purchased the land three years ago for $140,000 Hank contributos machinery (Sec. 1231 property purchased four years ago) having a $130,000 adjusted basis and a $75,000 FMV in exchange for 105 shares of Hades stock Lulu contributes services worth $50,000 in exchange for 40 shares of Hades stock Read the...
Ben and Jerry decide to incorporate their ice cream business. Allie would also like to be a shareholder in the bu...
Ben and Jerry decide to incorporate their ice cream business. Allie would also like to be a shareholder in the business. As such, Ben and Allie agree that immediately after the incorporation of the company and the issuance of stock, Ben will sell Allie half of his shares in the company. Ben contributes inventory (FMV $60,000, Basis $30,000), and accounts receivable (FMV $40,000, Basis $40,000) to the corporation for 50% of the stock, and Jerry contributes equipment (FMV $60,000, Basis...
In each of the problems below please describe the tax consequences to the parties involved in the transaction. The answer should include an analysis of whether Section 351 applies to the transaction (unless the problem already states that Section 351 applies) and the computations for any recognized gain, the tax basis of any stock received by the shareholders; the tax basis of any property received by the corporation and the holding period of the stock/property. 1. On January 1, 2019...
Three individuals form Skylark Corporation with the following contributions: Cliff, cash of $50,000 for 50 shares: Brad Land worth $20,000 (basis of $11,000) for 20 shares; and Ron, cattle worth $9,000 (basis of $6,000) for 9 shares and services worth $21,000 for 21 shares a. Brad's basis in his stock is $20,000. b. Ron's basis in his stock is $27,000. c. These transfers are fully taxable and not subject to $ 351. d. Ron's basis in this stock is $6,000....
QUESTION 1 Alley, Bob, and Cain form ABC Corporation by transferring the following: From = Transferor Property Transferred Services Transferred Stock Received Alley Equipment $40,000 $40,000 Bob Land $38,000 $0 $38,000 Cain $0 $22,000 $22,000 Would the above transfer qualify A and B for nonrecognition of gain or loss under Code Sec. 351? Why?
Janet, Carol, Eva, and Wendy incorporate their law practice ("Shysters-R-Us, Inc.") with the following investments: A) Janet contributes her copyright (basis of $60,000 and FMV of $144,000) for 9400 shares of Shyster stock, worth $98,000. The corporation also assumed her $46,000 of business debts. B) Carol contributes her real estate (basis of $783,000, FMV of $664,000) in exchange for 9700 shares of Shyster stock, worth $575,000, and received $224,000 cash. C) Eva contributes her patent (basis of $260,000, FMV of...
In the current year, Mick, Hank, and Lulu form Hades Corporation Mick contributes land (a capital asset) having a $125,000 FMV in exchange for 145 shares of Hades stock. Ho purchased the land three years ago for $140,000 Hank contributos machinery (Sec. 1231 property purchased four years ago) having a $130,000 adjusted basis and a $75,000 FMV in exchange for 105 shares of Hades stock Lulu contributes services worth $50,000 in exchange for 40 shares of Hades stock Read the...
Ben and Jerry decide to incorporate their ice cream business. Allie would also like to be a shareholder in the business. As such, Ben and Allie agree that immediately after the incorporation of the company and the issuance of stock, Ben will sell Allie half of his shares in the company. Ben contributes inventory (FMV $60,000, Basis $30,000), and accounts receivable (FMV $40,000, Basis $40,000) to the corporation for 50% of the stock, and Jerry contributes equipment (FMV $60,000, Basis...
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