QUESTION 2 All the following statements are true about corporate reorganization except: a. Taxable amounts for...

QUESTION 2

All the following statements are true about corporate reorganization except:

	a.	Taxable amounts for shareholders are classified as a dividend or capital gain.
	b.	Reorganizations receive treatment similar to corporate formations under § 351.
	c.	The transfers of stock to and from shareholders qualify for like-kind exchange treatment.
	d.	The value of the stock received by the shareholder less the gain not recognized (postponed) will equal the shareholder’s basis in the stock received.
	e.	All of these are true.

Solutions

Expert Solution

c) The transfer of stock to and from shareholders qualify for like-kind exchange treatment.

Explanation:

The options a, b, d are true about corporate reorganization, unfortunately, the transfer of stock to or from shareholders doesn't fit the section 1031 definition of like-kind exchange and this there may be a tax liability.

(Like-kind assets are real estate assets of a similar nature that can be exchanged without incurring any tax liability under section 1031 of the Internal tax code. Certain type of properties are expressly excluded from section 1031 treatment, including stock in trade or inventory.)

ekkarill92 answered 1 year ago

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