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Jerry and Ann form ABC Corporation. Jerry contributes services of $30,000 along with property with a...

Jerry and Ann form ABC Corporation. Jerry contributes services of $30,000 along with property with a basis of $10,000 and a FMV of $25,000 in return for 30% of the stock in ABC corporation. Ann contributes property with a basis of 10,000 and FMV of $55,000 in return for 70% of the stock in ABC corporation. Ann recognizes a gain $45,000. True /False

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Answer #1

The transaction is subject to Section 351 as the contributors of cash and property accounted for more than 80% of control of the corporation. No gain or loss is recognized and the corporations basis is the share holders basis.

The answer is False.

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