ForCustomer Friday 11:00 PM EST
Hi I would like the solution to the question asked in the past:
Text: Federal Income Taxation of Corporations and Shareholders, Bittker & Eustice, with
the current supplement. ISBN: 978-0-7913-8561-6
Lesson Assignment #3: Organization of a Corporation: Section 351 and Related Problems
Text: Study Chapter 3 of the Bittker & Eustice text.
Lesson Assignments must be prepared in Microsoft WORD® using the Times New Roman font,12 point, single space, and double space between paragraphs. Submit your responses to these
questions in one WORD document. List the question first, and then your response.
Copy the question, and then provide your answer on all of the following:
LESSON 3, PROBLEM #1
In not less than 1,000 words discuss Section 351 of the Internal Revenue Code. Your discussion should include the purpose of the section, the effect of the receipt of "boot", basis, and collateral
problems of incorporating a going business.
LESSON 3, PROBLEM #2
Arte, an individual, wants to transfer raw land worth $100,000 with a $50,000 basis to Angel Corporation for $100,000 in value. How much income will Arte realize and recognize if he receives $100,000 cash from Angel Corporation, and what will be Angel Corporation’s basis in the land? Does Arte’s income recognition change if Angel Corporation transfers its own stock to Arte in the exchange (assume the “general rule” applies)? Will the answer change in the stock case if Arte is the sole shareholder of Angel Corporation? Conceptually, why should it change?
LESSON 3, PROBLEM #3
Abby, an individual contributes property to CharlieCo, a newly formed corporation, in exchange for 75 shares. As part of the same transaction, Brett contributes services to CharlieCo in exchange for 25 shares. Does § 351 apply to the contributions of Abby and Brett?
LESSON 3, PROBLEM #4
Albert contributes to CarlCo, a newly formed corporation, property worth $80,000 with a basis of $60,000 in exchange for 2,000 shares. Assume the stock is worth $1,000 per share. As part of
the same transaction, Barry (an employee of Albert) contributes to CarlCo property worth $20,000 with a basis of $10,000 in exchange for 8,000 shares. How much income must Albert and Barry recognize? (Assume that if § 351 applies, Albert’s basis in the stock he receives is the same as his basis in the property.)
LESSON 3, PROBLEM #5
Arthur owns all 90 shares of Class A voting common stock and all 90 shares of Class C nonvoting common stock of ClayCo. Bill owns all 10 shares of Class B voting common stock and all 10 shares of Class D nonvoting common stock of X. Does Arthur control ClayCo under §368(c)? Can ClayCo make a Subchapter S election? What if the charter of ClayCo is amended so that Class D shares have 1/ 10 vote per share?
LESSON 3, PROBLEM #6
Alexandria and CharlesCo are both accrual-method taxpayers. Alexandria owns all the stock of CharlesCo. Alexandria supplied services to CharlesCo and accrued income there from (represented by bookkeeping entries of accounts receivable and payable) of $10,000; CharlesCo deducted $10,000. Later, Alexandria forgave the account owing in return for stock of CharlesCo worth $6,000. How much income or loss must Alexandria and CharlesCo recognize? What would result if CharlesCo was on the cash method of accounting and had not deducted the $10,000?
LESSON 3, PROBLEM #7
Abraham is an inventor who contributes a nonexclusive license to use his new patented invention to his wholly owned corporation, ChipCo for 100 shares of stock. Does § 351 apply? Why or
LESSON 3, PROBLEM #8 (Optional Bonus Problem)
Alec, who is 77 years old, owns 20 percent of CandaceCo’s stock, which is highly appreciated. Alec does not want to sell. The remaining 80 percent of CandaceCo’s stock is publicly held.
Barbara wants to acquire at least 80 percent of CandaceCo’s stock for cash but knows it cannot get that much stock in a tender offer. How can Alec and Barbara use § 351 to cash out the public and satisfy Alec’s desires? From a tax standpoint, what’s the probable reason that Alec would not want to sell?
Submitted: 8 months ago.
Category: Multiple Problems