Unformatted text preview: under prevailing income tax laws. 14-52 a. No gain is recognized since the transaction qualifies under Code Sec. 351. Sam's basis in the stock is $15,000, the same as his basis in the property transferred to the corporation. b. Bill recognizes a $2,000 gain ($3,000 fair market value 1 $1,000 basis). The transfer does not qualify under Code Sec. 351 because Bill does not end up with 80 percent control after the transaction. Bill's basis in the stock is $3,000. c. The corporation recognizes no gain or loss on the issuance of stock. The corporation takes over the basis of Sam's property plus any gain recognized by Sam on the transfer —$15,000 ($15,000 + no gain recognized). d. The corporation recognizes no gain or loss on the issuance of stock. The corporation's basis in the property is $3,000....
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- Summer '10
- Taxation in the United States, corporate income, corporate income tax