Frank and Sam (father and son) organize a corporation with 100 shares of common stock to...

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Frank and Sam (father and son) organize a corporation with 100 shares of common stock to which Frank transfers property worth

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Answer 1

Answer #1

Other Potential Tax Implications for Sam due to transfer:

Frank transferred property worth $80,000 in exchange for 70 shares of stock, which implies valuation of ($80,000/70)= $1142.86 per share. Accordingly, value of 30 shares of stock will be $1142.86*30 = $34,286.

However, Sam has transferred property worth $20,000 only in exchange for 30 shares of stock.

Thus, there is Potential Gain of ($34,286-$20,000)= $14,286 on which tax may be implied.

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Answer 2

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Frank and Sam (father and son) organize a corporation with 100 shares of common stock to...

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