Question

22.) bob and sally transferred property to new in exchange for 100% of news stock but failed to attach a 351 election to the corporate tax return the failure to elect will trigger recognition of any gains reazlied?

True OR False

23.) bob and ted transferred property to new in return for 67% if news common stock. In the same transaction carol received 33% of new cos stock in return for legal services. Bob and teds transfers will qualify for 351 treatment however carols will not?

True OR False

24.)Janice transferred property with a FMV of 100,000 basis 25,000 in return for 50% of news stock. In the same transaction jerry received 50% of news stock in return for property with a FMV if 15,000 plus marketing services he will provide over the next three months. The transactions will qualify for 351 treatment?

True OR False

Answer 1

Every significant transferor must include a statement entitled, “STATEMENT PURSUANT TO Such trasfer to tax return

A SIGNIFICANT TRANSFEROR,” on or with such transferor's income tax return for the taxable year of the section 351 exchange. If a significant transferor is a controlled foreign corporation (within t, each United States shareholder (within the meaning of section 951(b)) with respect thereto must include this statement on or with its return. The statement must include -

(1) The name and employer identification number (if any) of the transferee corporation;

(2) The date(s) of the transfer(s) of assets;

(3) The fair market value and basis of the property transferred by such transferor in the exchange, determined immediately before the transfer and aggregated as follows:

(i) Importation property transferred in a loss importation transaction

(ii)Loss duplication property as

(iii)Property with respect to which any gain or loss was recognized on the transfer (without regard to whether such property is also identified in paragraph (a)(3)(i) or (ii) of this section); and

(iv)Property not described

Exception for certain transferee corporations. The transferee corporation is not required to file a statement unde, if all of the information that would be included in the statement described in paragraph (b) of this section is included in any statement(s) described in paragraph (a) of this section that is attached to the same return for the same section 351 exchange.

1. Answer : TRUE

2.Significant transferor as per 351 means a person that trasferred property to a corporation and received stock of the transferee corporation in an exchange described in section 351 if, immediately after the exchange, such person-

(i) Owned at least five percent (by vote or value) of the total outstanding stock of the transferee corporation if the stock owned by such person is publicly traded, or

(ii) Owned at least one percent (by vote or value) of the total outstanding stock of the transferee corporation if the stock owned by such person is not publicly traded

ANSWER:TRUE

since, Carol owns less than 51%

3. ANSWER:FALSE