Question

) In which of the following independent situations is the Sec. 351 control requirement met? a Wanda transfers property to Yankee Corporation for 75% of Yankee Corporation's stock, and A-Rod provides services to Yankee Corporation for the remaining 25% of Yankee Corporation stock. b) Jose transfers property to Met Corporation for 60% of Met's stock, andNorberttransfers property worth $15,000 and performs services worth $25,000 for the remaining 40% of Met's stock. c) Joe and his wife Cindy each have owned 50% of the 100 outstanding shares of Net Corporation stock since it was formed three years ago. In the current year, their daughter, Peggy, transfers property to Net Corporation for 50 newly issued shares of Net stock d) Robert and his son Steve develop a plan to form RS Corporation on June 14 of this year Robert transfers property worth $50,000 for 50 shares of RS Corporation stock. As part of the single plan to incorporate, Steve transfers $50,000 cash for 50 shares of RS Corporation stock on uly 1. e) Assume the same facts as in Part (d), except that Robert has a prearranged plan to sell 30 of his shares to Steve on September 1.

Answer 1

a) Since transferor has 75% ownership after the transfer, the transferor does not control the transferee after the transfer. This particular transfer doesn't meets the requirements of Section 351 control b) Transferor has 100% ownership even after the transfer, and the property transferred by Norbert is not nominal, the transferor controls the transferee even after the transfer. So naturally this particular transfer meets the Section 351 control requirement. c) Transferor has one third ownership after the transfer, the transferor does not control the transferee after d) Transferor has 100% ownership even after the transfer, the transferor controls the transferee after the e) A transferor must control the transferee at once after the exchange. It is not specified in Section 351 the transfer. So This particular transfer does not meets the Section 351 control requirement. transfer. So naturally this particular transfer meets the Section 351 control requirement. that how long the transferor should maintain the control. The transferor cannot prearrange plans of disposition of the stock to other parties not in the control group. So This particular transfer does not meets the Section 351 control requirement.