Terry and Billy own 50% of the shares in ABC corporation respectively. They would like Samantha...
Terry and Billy own 50% of the shares in ABC corporation respectively. They would like Samantha to join them as a shareholder in the company. In order for Samantha to join them without recognizing any tax, which of the following must occur:
A. Samantha must contribute property for stock
B. Samantha must receive less than 20% of the stock
C. Samantha must contribute property and Terry and Billy must also contribute property equal to at 10% of the FMV of their shares respectively
D. None of the above
Homework Answers
Samantha must receive less than 20% of the stock
Explanation: If the amount received or accrued from less-than-20%-owned corporations, Samantha can join them without recognizing any tax.
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