Multiple Choice
Sarah and Tony (mother and son) form Dove Corporation with the following investments: cash by Sarah of $65,000; land by Tony (basis of $25,000 and fair market value of $35,000) . Dove Corporation issues 400 shares of stock, 200 each to Sarah and Tony. Thus, each receives stock in Dove worth $50,000.
A) Section 351 cannot apply since Sarah should have received 260 shares instead of only 200.
B) Section 351 may apply because stock need not be issued to Sarah and Tony in proportion to the value of the property transferred.
C) Tony's basis in the stock of Dove Corporation is $50,000.
D) As a result of the transfer, Tony recognizes a gain of $10,000.
E) None of these.
Correct Answer:
Verified
Correct Answer:
Verified
Q54: Alan, an Owl Corporation shareholder, makes a
Q55: In return for legal services worth $60,000
Q56: Ashley, a 70% shareholder of Wren Corporation,
Q57: Similar to like-kind exchanges, the receipt of
Q58: Because services are not considered property under
Q60: When depreciable property is transferred to a
Q61: A city contributes $500,000 to a corporation
Q62: A long-term note is treated as "boot."
Q63: Erica transfers land worth $500,000, basis of
Q64: To encourage the development of an industrial