- Rachel owns 100% of the stock of Cardinal Corporation. In the current year Rachel transfers an installment obligation, tax basis of $180,000 and fair market value of $350,000, for additional stock in Cardinal worth $350,000.
Rachel has a taxable gain of $180,000. Rachel has a taxable gain of $170,000. Rachel recognizes no taxable gain on the transfer. Rachel has a basis of $350,000 in the additional stock she received in Cardinal Corporation. None of the above. Question 2
- If a transaction qualifies under A?§ 351, any recognized gain is equal to the value of the boot received.
True
False
- Jane transfers property (basis of $180,000 and fair market value of $500,000) to Green Corporation for 80% of its stock (worth $425,000) and a long term note (worth $75,000), executed by Green Corporation and made payable to Jane. As a result of the transfer:
Jane recognizes no gain. Jane recognizes a gain of $75,000. Jane recognizes a gain of $270,000. Jane recognizes a gain of $320,000. None of the above.
- Wade and Paul form Swan Corporation with the following investments. Wade transfers machinery (basis of $40,000 and fair market value of $100,000), while Paul transfers land (basis of $20,000 and fair market value of $90,000) and services rendered (worth $10,000) in organizing the corporation. Each is issued 25 shares in Swan Corporation. With respect to the transfers:
Wade has no recognized gain; Paul recognizes income/gain of $80,000. Neither Wade nor Paul has recognized gain or income on the transfers. Swan Corporation has a basis of $30,000 in the land transferred by Paul. Paul has a basis of $30,000 in the 25 shares he acquires in Swan Corporation. None of the above.