Solved by verified expert :311. CHAPTER
4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que11
Since services are not considered property under § 351, a taxpayer must report
as income the fair market value of stock received for such services.
a.
True
b. False
312. CHAPTER
4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que12
The receipt of securities (i.e., long-term debt) in exchange for the transfer
of appreciated property to a controlled corporation results in recognition of
realized gain to the transferor.
a.
True
b. False
313. CHAPTER
4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que13
In a § 351
transaction, if a transferor receives consideration other than stock, the
transaction can be taxable.
a.
True
b. False
314. CHAPTER
4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que14
The receipt of nonqualified preferred stock in exchange for the transfer of
appreciated property to a controlled corporation results in recognition of gain
to the transferor.
a.
True
b. False
315. CHAPTER
4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que15
Jill transfers property worth $200,000 (basis of $190,000) to Blue Corporation.
In return, she receives 80% of the stock in Blue Corporation (fair market value
of $180,000) and a long-term note, executed by Blue and made payable to Jill
(fair market value of $20,000). Jill recognizes gain of $20,000 on the
transfer.
a.
True
b. False
316. CHAPTER
4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que16
Three individuals form Skylark Corporation with the following contributions:
Cliff, cash of $50,000 for 50 shares; Brad, land (fair market value of $20,000)
for 20 shares; and Ron, cattle (fair market value of $9,000) for 9 shares and
services (fair market value of $21,000) for 21 shares. Section 351 will not
apply in this situation because the control requirement has not been satisfied.
a.
True
b. False
317. CHAPTER
4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que17
In order to retain the services of Bonnie, a key employee in Ralph’s sole
proprietorship, Ralph contracts with Bonnie to make her a 25% owner. Ralph
incorporates the business receiving in return 100% of the stock. Three days
later, Ralph transfers 25% of the stock to Bonnie. Under these circumstances, §
351 will not apply to the incorporation of Ralph’s business.
a.
True
b. False
318. CHAPTER
4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que18
One month after Sally incorporates her sole proprietorship, she gives 25% of
the stock to her children. Section 351 cannot apply to Sally because she has
not satisfied the 80% control requirement.
a.
True
b. False
319. CHAPTER
4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que19
A person who performs services for a corporation in exchange for stock cannot
be treated as a member of the transferring group even if that person also
transfers some property to the corporation.
a.
True
b. False
320. CHAPTER
4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que20
The use of § 351 is not limited to the initial formation of a corporation, and
it can apply to later transfers as well.
a.
True
b. False
