Homework Answers
No gain or loss shall be recognized if property is transferred to a corporation by one or more persons solely in exchange for stock in such corporation and immediately after the exchange such person or persons are in control as per sec 386(c)
Section 368(c) defines “control” to mean the ownership of stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote and at least 80 percent of the total number of shares of all other classes of stock of the corporation.
As none of them holds 80% of the total stock the transaction will not qualify for sec 351
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QUESTION 1 Alley, Bob, and Cain form ABC Corporation by transferring the following: From = Transferor...
Doug, Elbert, and Fran form DEF Corporation by transferring the following: From Transferor Property Transferred Stock...
Doug, Elbert, and Fran form DEF Corporation by transferring the following: From Transferor Property Transferred Stock Received 10-Year Notes Doug $75,000 $75,000 $0 Elbert $25,000 $25,000 $0 Fran $25,000 $0 $25,00 Would Does the above transfer qualify Doug and Elbert for nonrecognition of gain or loss under Code Sec. 351? A. No, the note disqualifies the transfer. B. No, control was not obtained in the transfer. C. Yes, the note is not considered stock and control is obtained D. Yes,...
Same Scenario as prior question for DEF Corp. Doug, Elbert, and Fran form DEF Corporation by...
Same Scenario as prior question for DEF Corp. Doug, Elbert, and Fran form DEF Corporation by transferring the following: Stock Received From = Transferor Property Transferred 10-Year Notes Doug $75,000 $75,000 $0 Elbert $25,000 $25,000 $0 Fran $25,000 $0 $25,00 Woul Does the above transfer qualify Fran for nonrecognition of gain or loss under Code Sec. 351? O A. Yes, control was obtained in the transfer. B. Yes, transfers to start a corporation are always allowed to exclude gains in...
Problem 18-31 (Algorithmic) (LO. 1, 3) Ann and Bob form Robin Corporation. Ann transfers property worth...
Problem 18-31 (Algorithmic) (LO. 1, 3) Ann and Bob form Robin Corporation. Ann transfers property worth $322,500 (basis of $112,875) for 70 shares in Robin Corporation. Bob receives 30 shares for property worth $129,000 (basis of $25,800) and for legal services (worth $12,900) in organizing the corporation. If there is no gain or loss, enter "0" for the amount. a. What gain or income, if any, will the parties recognize on the transfer? Ann recognizes of $ Bob recognizes of...
Problem 4-33 (LO. 1,3) Ann and Bob form Robin Corporation. Ann transfers property worth $420,000 (basis...
Problem 4-33 (LO. 1,3) Ann and Bob form Robin Corporation. Ann transfers property worth $420,000 (basis of $150,000) for 70 shares in Robin Corporation. Bob receives 30 shares for property worth $15,000 (basis of $3,000) and for legal services (worth $165,000) in organizing the corporation. a. What gain or income, if any, will the parties recoonize on the transfer? Ann recognizes no gain or loss X of 0 X and Bob recognizes no gain or loss has compensation income of...
Question 2 3.03 points Save Answer Identify which of the following statements is true. A corporation...
Question 2 3.03 points Save Answer Identify which of the following statements is true. A corporation must recognize a loss when transferring noncash boot property that has declined in value and its stock to a transferor as part of a Sec. 351 exchange Section 351 provides for nonrecognition of gain for the transferee corporation when it distributes appreciated and that is boot property to a shareholder The transferee corporation's holding period for assets acquired in an exchange meeting the Sec....
1- nn and Bob form Robin Corporation. Ann transfers property worth $352,500 (basis of $123,375) for...
1- nn and Bob form Robin Corporation. Ann transfers property worth $352,500 (basis of $123,375) for 70 shares in Robin Corporation. Bob receives 30 shares for property worth $141,000 (basis of $28,200) and for legal services (worth $14,100) in organizing the corporation. a. What gain or income, if any, will the parties recognize on the transfer? Ann recognizes of $. Bob recognizes of $. b. What basis do Ann and Bob have in the Robin Corporation stock? Ann has a basis of...
Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in...
Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation’s stock. The property transferred to the corporation had the following fair market value and adjusted basis. FMV Adjusted Basis Inventory $ 20,000 $ 11,000 Building 250,000 100,000 Land 530,000 300,000 Total $ 800,000 $ 411,000 The corporation also assumed a mortgage of $500,000 attached to the building and land. The fair market value of the...
Ann and Bob form Robin Corporation. Ann transfers property worth $420,000 (basis of $150,000) for 70...
Ann and Bob form Robin Corporation. Ann transfers property worth $420,000 (basis of $150,000) for 70 shares in Robin Corporation. Bob receives 30 shares for property worth $15,000 (basis of $3,000) and for legal services (worth $165,000) in organizing the corporation. What gain or income, if any, will the parties recognize on the transfer? Ann recognizes a gain of $______ and Bob recognizes a gain of $_____ and compensation income of $______. What basis do Ann and Bob have in...
1. A, B, and C decided to organize the ABC Corporation with the following investments: A...
1. A, B, and C decided to organize the ABC Corporation with the following investments: A pays cash of $50,000 for 50 shares B contributes land worth $40,000 (basis to B of $10,000) for 40 shares C.- performs services on behalf of ABC Corporation (worth $10,000) for 10 shares. Assume each share of stock has a value of $1,000 A. How much gain will A, B,and C recognize? Sec. 351(a), Regs. Sec. 1.341-1 (a), Rev. Rul. 69-357, 1969-1 C.B. 101,...
answer 2,3,4,5 2E - C-Corp. Formation Example The following individuals formed Newby Corporation by transferring the...
answer 2,3,4,5
2E - C-Corp. Formation Example The following individuals formed Newby Corporation by transferring the following: Number of Shares Received (Value per share $1.000) Basis to Fair Market Erom Transferor Transferor Value Adam Cash $30,000 $30,000 70 Equipment Brittany Land 30.000 40,000 60,000 50,000 30 Mortgage on Land (assumed by Newby Corp.) Chad Building 30,000 30,000 50,000 45,000 40 plus $10,000 cash Dawn Administrative services for the 6,000 Corp. 1. How much gain or loss is recognized by Adam?...
Doug, Elbert, and Fran form DEF Corporation by transferring the following: From Transferor Property Transferred Stock Received 10-Year Notes Doug $75,000 $75,000 $0 Elbert $25,000 $25,000 $0 Fran $25,000 $0 $25,00 Would Does the above transfer qualify Doug and Elbert for nonrecognition of gain or loss under Code Sec. 351? A. No, the note disqualifies the transfer. B. No, control was not obtained in the transfer. C. Yes, the note is not considered stock and control is obtained D. Yes,...
Same Scenario as prior question for DEF Corp. Doug, Elbert, and Fran form DEF Corporation by transferring the following: Stock Received From = Transferor Property Transferred 10-Year Notes Doug $75,000 $75,000 $0 Elbert $25,000 $25,000 $0 Fran $25,000 $0 $25,00 Woul Does the above transfer qualify Fran for nonrecognition of gain or loss under Code Sec. 351? O A. Yes, control was obtained in the transfer. B. Yes, transfers to start a corporation are always allowed to exclude gains in...
Problem 18-31 (Algorithmic) (LO. 1, 3) Ann and Bob form Robin Corporation. Ann transfers property worth $322,500 (basis of $112,875) for 70 shares in Robin Corporation. Bob receives 30 shares for property worth $129,000 (basis of $25,800) and for legal services (worth $12,900) in organizing the corporation. If there is no gain or loss, enter "0" for the amount. a. What gain or income, if any, will the parties recognize on the transfer? Ann recognizes of $ Bob recognizes of...
Problem 4-33 (LO. 1,3) Ann and Bob form Robin Corporation. Ann transfers property worth $420,000 (basis of $150,000) for 70 shares in Robin Corporation. Bob receives 30 shares for property worth $15,000 (basis of $3,000) and for legal services (worth $165,000) in organizing the corporation. a. What gain or income, if any, will the parties recoonize on the transfer? Ann recognizes no gain or loss X of 0 X and Bob recognizes no gain or loss has compensation income of...
Question 2 3.03 points Save Answer Identify which of the following statements is true. A corporation must recognize a loss when transferring noncash boot property that has declined in value and its stock to a transferor as part of a Sec. 351 exchange Section 351 provides for nonrecognition of gain for the transferee corporation when it distributes appreciated and that is boot property to a shareholder The transferee corporation's holding period for assets acquired in an exchange meeting the Sec....
1. A, B, and C decided to organize the ABC Corporation with the following investments: A pays cash of $50,000 for 50 shares B contributes land worth $40,000 (basis to B of $10,000) for 40 shares C.- performs services on behalf of ABC Corporation (worth $10,000) for 10 shares. Assume each share of stock has a value of $1,000 A. How much gain will A, B,and C recognize? Sec. 351(a), Regs. Sec. 1.341-1 (a), Rev. Rul. 69-357, 1969-1 C.B. 101,...
answer 2,3,4,5
2E - C-Corp. Formation Example The following individuals formed Newby Corporation by transferring the following: Number of Shares Received (Value per share $1.000) Basis to Fair Market Erom Transferor Transferor Value Adam Cash $30,000 $30,000 70 Equipment Brittany Land 30.000 40,000 60,000 50,000 30 Mortgage on Land (assumed by Newby Corp.) Chad Building 30,000 30,000 50,000 45,000 40 plus $10,000 cash Dawn Administrative services for the 6,000 Corp. 1. How much gain or loss is recognized by Adam?...
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