If a shareholder exchanges property for 75% of common stock of a corporation, could the gain...
If a shareholder exchanges property for 75% of common stock of a corporation, could the gain realized and recognized be calculated using section 351 rules?
Homework Answers
Answer:
Section 351 defers gain or loss on transfer if after transfer the transferor is in control of the transferee corporation immediately after the exchange. Control is defined as 80% of total combined voting power of stock or at least 80% of total number of shares of all classes.
In this case since the shareholder exchanges property for 75% of common stock, section 351 does not apply.
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If a shareholder exchanges property for 75% of common stock of a
corporation, could the gain...
Exercise 20-15 (LO. 1) On January 4, 2018, Martin Corporation acquires two properties from a shareholder...
Exercise 20-15 (LO. 1) On January 4, 2018, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351, The shareholder's basis, the fair market value, and the built-in gain (loss) of each property are: Fair Market Built in Gain Shareholder's Basis $300,000 $525,000 or (Loss) $375,000 $75,000 $400,000 ($125,000) ($50,000) Value Property 1 Property 2 Net built-in loss Martin adopts a plan of liquidation later in the year and...
Discussion Question 4-11 (LO. 3) With respect to the calculation of the basis of stock received...
Discussion Question 4-11 (LO. 3) With respect to the calculation of the basis of stock received by a shareholder in a $ 351 transfer, label each of the following as being either "True" or "False" a. If a shareholder transfers a liability to the corporation along with property, the basis in the stock received is reduced by the amount of the liability transferred to the corporation. b. Section 362(e)(2) generally requires the corporation to step down the carryover basis for...
How do liabilities assumed by a corporation affect a shareholder transferring property to it in a...
How do liabilities assumed by a corporation affect a shareholder transferring property to it in a qualifying Section 351 transfer?
Sara and Mark transferred property to Owl Corporation in exchange for two-thirds of its stock. For...
Sara and Mark transferred property to Owl Corporation in exchange for two-thirds of its stock. For services rendered, Alex received the remaining one-third of the stock. Explain whether the exchanges will be taxable in the context of Section 351 and describe several steps which could be taken to mitigate tax liability.
taxpayer exchanges land A for Land B . ( Like Kind property topic in Accounting )...
taxpayer exchanges land A for Land B . ( Like Kind property topic in Accounting ) Land A Adjusted Basis = 190,000 + Cash + 5000 Land B Fair Market Value = 240,000 What is realized Gain ? what is Recognized gain ? what is the basis for land B ?
22. Under a plan of complete liquidation, Cain Corporation distributes land (not a property) with an...
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...
12) Isabella owns all 100 shares of Finch Corporation's stock, valued at $100,000. Abigail owns property...
12) Isabella owns all 100 shares of Finch Corporation's stock, valued at $100,000. Abigail owns property that has a $15,000 adjusted basis and a $100,000 FMV. Abigail contributes the property to Finch Corporation in exchange for 100 shares of newly issued Finch stock. Does Sec. 351 apply to Abigail's exchange? What is the amount of her realized gain or loss? How much is recognized?
ORGANIZATION OF A CORPORATION: SECTION 351 and RELATED PROBLEMS 3B Boot; Basis; Debt; “Midstream” Issues (1)(a)...
ORGANIZATION OF A CORPORATION: SECTION 351 and RELATED PROBLEMS 3B Boot; Basis; Debt; “Midstream” Issues (1)(a) Section 351(a) applies. Upon exchange with X, (1) A’s amount realized is $100; (2) A’s gain realized is $60; (3) nothing is recognized, because of § 351(a); (4) A’s basis in stock received is $40 under § 358(a)(1); (5) A’s holding period in the stock tacks under § 1223(1); (6) X’s basis in property is $40 under § 362(a)(1); (7) X’s holding period for...
taxpayer exchanges land A for Land B . ( Like Kind property topic in Accounting ) Land A = Adjusted Basis = 190,000 Land...
taxpayer exchanges land A for Land B . ( Like Kind property topic in Accounting ) Land A = Adjusted Basis = 190,000 Land B = Fair Market value 210,000and a Car FMV 15,000 What is realized Gain ? what is Recognized gain ? what is the basis for land B ?
QUESTION 7 A corporation sells property (basis of $175,000) to its sole shareholder for $125,000, the...
QUESTION 7 A corporation sells property (basis of $175,000) to its sole shareholder for $125,000, the fair market value of the property. With respect to the sale, The shareholder has a basis of S175,000 in the property. The corporation has a tax loss of S50,000. The corporation does not recognize a tax loss but reduces its E & P account $50,000. The shareholder has a constructive dividend of $50,000. None of the above QUESTION 8 Assume taxable income is the...
Exercise 20-15 (LO. 1) On January 4, 2018, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351, The shareholder's basis, the fair market value, and the built-in gain (loss) of each property are: Fair Market Built in Gain Shareholder's Basis $300,000 $525,000 or (Loss) $375,000 $75,000 $400,000 ($125,000) ($50,000) Value Property 1 Property 2 Net built-in loss Martin adopts a plan of liquidation later in the year and...
Discussion Question 4-11 (LO. 3) With respect to the calculation of the basis of stock received by a shareholder in a $ 351 transfer, label each of the following as being either "True" or "False" a. If a shareholder transfers a liability to the corporation along with property, the basis in the stock received is reduced by the amount of the liability transferred to the corporation. b. Section 362(e)(2) generally requires the corporation to step down the carryover basis for...
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...
12) Isabella owns all 100 shares of Finch Corporation's stock, valued at $100,000. Abigail owns property that has a $15,000 adjusted basis and a $100,000 FMV. Abigail contributes the property to Finch Corporation in exchange for 100 shares of newly issued Finch stock. Does Sec. 351 apply to Abigail's exchange? What is the amount of her realized gain or loss? How much is recognized?
QUESTION 7 A corporation sells property (basis of $175,000) to its sole shareholder for $125,000, the fair market value of the property. With respect to the sale, The shareholder has a basis of S175,000 in the property. The corporation has a tax loss of S50,000. The corporation does not recognize a tax loss but reduces its E & P account $50,000. The shareholder has a constructive dividend of $50,000. None of the above QUESTION 8 Assume taxable income is the...
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