Tax Accounting Problems
Not what you're looking for?
1) IRS 351- Simultaneous transfers
Albert Able, Brenda Baker, Carla Cox, and Dan Davis are all shareholders of Corporation A. Corporation A has 100 shares if capital stock outstanding. Able, Baker, and Cox each transferred property on February 11, 20*4 and each received 25 shares of capital stock. Dan Davis transferred property on July 17, 20*4 and received 25 shares of stock. Did the transactions satisfy the 80% control test? Explain.
2) IRC 351 - Nominal transfers
Albert Able owns all of the outstanding capital stock (80 shares, FMV $200,000) of Corporation A and desires to bring Betty Baker into the corporation. Betty Baker transfers an asset (FMV $ 50,000/ Basis $ 5,000) in exchange for 20 shares of capital stock. Is the control test satisfied? Explain.
3) IRC 351 - Loss of control
Anne Able incorporates her sole proprietorship by transferring assets in exchange for 100% of the corporate stock. Anne Able then gifts 14% to her son and sells 21% to a third party. Is the control test satisfied?
4) IRC 351 - Disproportion
Albert Able and his son create Corporation A. Albert Able transfers an asset (FMV $800) and receives 40 shares of capital stock. The son transfers an asset (FMV $200) and receives 60 shares of capital stock. Will IRC 351 apply?
5) IRC 351 - Boot
Albert Able and Brenda Baker create Corporation A. Albert Able transfers $ 4,000 cash and receive 40 shares of capital stock. Brenda Baker transfers an asset (FMV $7,000, Basis $2,000) and receives 60 shares of capital stock and $1,000 cash. Does IRC 351 govern? Explain.
6) IRC 351 - Boot
Albert Able transfers three assets in an IRC 351 exchange.
The total market value of the assets is $200,000 and the total basis is $170,000. Albert Able receives capital stock (FMV $160,000) and cash of $40,000. Does IRC 351 govern?
Explain.
Purchase this Solution
Solution Summary
The accounting questions looks at simultaneous transfers, nominal transfers, loss of control, disproportion and capital stock.
Solution Preview
1) IRS 351- simultaneous transfers
Albert Able, Brenda Baker, Carla Cox, and Dan Davis are all shareholders of Corporation A. Corporation A has 100 shares if capital stock outstanding. Able, Baker, and Cox each transferred property on February 11, 20*4 and each received 25 shares of capital stock. Dan Davis transferred property on July 17, 20*4 and received 25 shares of stock. Did the transactions satisfy the 80% control test? Explain.
No, it didn't because it failed to satisfy the "...immediately after the exchange such person or persons are in control of the corporation..." clause of the 80% control test definition (the first 3 people had 75% which is not control). It's worth mentioning here that if all of them agreed to transfer property in exchange for stocks beforehand (predetermined agreement), then it doesn't really matter that 3 of them did the transfer together ...
Purchase this Solution
Free BrainMass Quizzes
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
IPOs
This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Paradigms and Frameworks of Management Research
This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.