Issuance of stock in exchange for property is a non taxable transaction under Section 351 only if all the contributors of cash + property have 80% or more control.
If there is no control by shareholder group contributing cash and property, shareholder reports the transaction as a sale of property at Fair market value as of the date of contribution and recognizes all the gain or loss.
Sec. 351 does not apply to Abigail's exchange.
Realized gain = Fair market value - Basis = 100,000 - 15,000 = 85,000
Recognized gain = Realized gain = 85,000
12) Isabella owns all 100 shares of Finch Corporation's stock, valued at $100,000. Abigail owns property...
Wilbur transfers property valued at $100,000 (basis = $70,000) to the Debold Corporation in exchange for 100 percent of its stock. What is Wilbur’s realized gain or loss on the transfer and his recognized gain or loss? What is his basis in the stock received? What is the corporation’s basis in the property received?
PROBLEM 1: Jerry transfers two assets to a corporation as part of a Sec. 351 exchange. The first asset has an adjusted basis of $70,000 and an FMV of $50,000. The second asset has an adjusted basis of $70,000 and an FMV of $150,000. The FMV of the stock received is $180,000, and he also receives $20,000 cash. The realized and recognized gain on the second asset is A) $80,000 realized; $20,000 recognized. B) $80,000 realized; $15,000 recognized. C) $20,000...
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...
Crystal owns 183 shares of Carson Inc. stock that has an adjusted basis of $136,335. On December 18, 2018, she sells the 183 shares for FMV ($127,185). On January 7, 2019, she purchases 244 shares of Carson stock for $191,540. a. What are Crystal's realized and recognized gain or loss on the sale of the 183 shares sold on December 18, 2018? b. What is Crystal's adjusted basis for the 244 shares purchased on January 7, 2019? c. How would...
Harold owns 130 shares of stock in Becker Corporation. His adjusted basis for the stock is $215,000. On December 15, 2018, he sells the stock for $180,000. He purchases 195 shares of Becker Corporation stock on January 12, 2019, for $230,100. a. What are Harold's realized and recognized gain or loss on the sale? b. What is Harold's adjusted basis for the 195 shares purchased on January 12, 2019? c. How would your answers in (a) and (b) change if...
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...
In the current year, Matt, Tam, and Chris form Air Corporation. Matt contributes land (a capital asset) having a $60,000 FMV purchased as an investment four years ago for $55,000 in exchange for 60 shares of Air stock. Tam contributes machinery (Sec. 1231 property) purchased four years ago and used in her business in exchange for 60 shares of Air stock. Immediately before the exchange, the machinery had a $100.000 adjusted basis and a 60.000 FMV. Chris contributes services worth...
I need help with this. Harold owns 110 shares of stock in Becker Corporation. His adjusted basis for the stock is $183,000. On December 15, 2018, he sells the stock for $154,000. He purchases 165 shares of Becker Corporation stock on January 12, 2019, for $193,050. a. What are Harold's realized and recognized gain or loss on the sale? b. What is Harold's adjusted basis for the 165 shares purchased on January 12, 2019? c. How would your answers in...
22. Under a plan of complete liquidation, Cain Corporation distributes land (not a property) with an adjusted basis of $410,000 and an FMV of $300,000 for all Gary's stock. Gary's basis in his 10% interest in the Cain stock is $250.000. Find Gary's basis in the land and Cain Corporation's recognized gain or loss. A) Recognized Gain/Loss $110,000 loss Recognized Gain/Loss $110,000 loss Basis $300,000 B) Basis $250,000 C) Basis $300,000 D) Basis $250,000 Recognized Gain/Loss SO Recognized Gain/Loss SO...
Except as otherwise stated, A starts out with non-depreciable real property (a capital asset) worth $100 (adjusted basis $40) and ends up with cash of $50 plus a 50% interest (worth $50) in, a newly organized corporation that owns the property. For each part, determine the following: i. A’s amount realized ii. A’s gain or loss realized iii. A’s gain or loss recognized in the character thereof iv. A's basis in the X stock received v. A’s holding period for...