15 Feb Bob transfers to New Co. a piece of land with FMV of $20K and A/B of $2K in exchange for 100% of New Co. stock. Bob has owned the land for 2 years. Since 351 applies, then New C
Question 1:
Bob transfers to New Co. a piece of land with FMV of
$20K and A/B of $2K in exchange for 100% of New
Co. stock. Bob has owned the land for 2 years.
Since 351 applies, then New Co. will take an A/B in
the land of $2K and will have the same holding period
as Bob.
Question 2:
Bob transfers to New Co. a piece of land with FMV of $20K
and A/B of $2K in exchange for 50% of New Co. stock.
Bob has owned the land for 2 years.
Since 351 does NOT apply, then Bob recognizes $18K in
gain. New Co. will take an A/B in the land of $20K and will
start a new holding period.
Question 3:
On January 15, Dan transferred land
(basis=$40,000, FMV=$90,000) to a controlled
corporation in exchange for stock in the
corporation.
Dan acquired the land by inheritance.
The land was transferred to the corporation
subject to a $20,000 mortgage.
Assume mortgage was for land purchased.
Any gain recognized by Dan? Why?
Question 4:
On January 15, Dan transferred land (basis=$40,000, FMV=$90,000) to a controlled corporation in exchange for stock in the corporation.
Dan acquired the land by inheritance.
The land was transferred to the corporation subject to a $20,000 mortgage.
In examining the loan papers, you notice that Dan’s signature on the mortgage agreement is dated January 2.
Any gain recognized by Dan? Why?
Question 5:
Andre transfers land (basis $35,000; FMV
$60,000; mortgage $50,000) and equipment
(basis $5,000; FMV $5,000) to a controlled
corporation.
What are the tax consequences for Andre?
Brad, Otis, Wade and Andrea form Teal Corp. with the following investments. Brad’s services were considered organization costs & capitalized. Otis received $30,000 cash from Teal Corp.
Basis Fair Market Value Shares
Brad- Services $0 $ 30,000 30
Otis – Equipment $345,000 $300,000 270
Wade – Cash $ 90,000 $ 90,000 150
– A/Receiv $0 $ 60,000
Andrea – Bldg $210,000 $450,000 150
– Mort. ($300,000) ($300,000)
$630,000 600
-$30,000 $1,000/sh
$600,000
For each party, determine realized and recognized gain or loss, basis in stock, and basis in assets.
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