C12-Chp-04-1A-Corp-Formation-2012

C12-Chp-04-1A-Corp-Formation-2012 - Chapter 4A. Corporate...

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Chapter 4A. Corporate Formation Text – Pg. 1 to 16 Howard Godfrey, Ph.D., CPA Professor of Accounting UNC Charlotte Copyright © 2011. Howard Godfrey Edited December 30, 2010 C11-Chp-04-1A-Corp-Formation-2011
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The student should: 1.Understand how to get a charter 2.Understand general rule for computing gain or loss under §1001, & basis where assets are contributed to a corporation in return for stock. Page 2. 3.Understand the requirements for a §351 tax-deferred exchange of property or services for stock in a corporation. Page 4. 4.Understand how to compute recognized gain or loss under §351 for contribution of assets or services to a corporation in return for corporate stock. Page 7+.
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The student should: 5. Understand the impact of receiving boot or being relieved of debt . Page 9+. 6. Understand how to compute a stockholder’s basis for stock received in a §351 transaction. Page 11+. 7. Understand how to compute the corporation’s basis for assets received in a §351 transaction. Page 12+. 8. Understand built-in loss rules. Page 13.
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The student should: 8. Understand the rules for depreciation recapture and credit recapture. §1245(b)(3) Page 16. 9. Know how to determine whether a §351 transaction should be chosen . Page 24. 10.Understand the tax treatment of shareholder contributions to equity, as well as contributions by non-shareholders. Page 16. 11.Understand the role of debt in capital structure. Page 18. 12.Understand the tax treatment of losses by stockholders , including §1244 losses. Page 21. Also, explain §1202 and §1044. Page 23+.
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Determine legal requirements for forming a corporation.
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Legal Requirements for Forming a Corp. The legal requirements for forming a corporation depend on the laws of the state in which the corporation is incorporated. These laws provide for legal capital minimums, incorporation fee, franchise tax, and corporate tax rules. Most corporations are incorporated in the state in which they commence business. Articles of incorporation must be filed. A fee is charged for incorporation and an annual franchise tax is collected.
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Legal Requirements for Forming a Corp. When forming a corporation, may you apply for a Subchapter S corporate charter? NO!!!!
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Explain the requirements for deferring gain or loss upon incorporation.
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FMV Received: + Vaue of assets we receive + Our debt taken by other party + Other consideration we receive = Total value we receive - Basis of our property we give - Increase in our debt = Gain (Loss) Realized Recognized Gain or Loss In taxable exchange basis of asset received is its FMV. Gain or Loss - Sec. 61, 1001
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Exchanges-Not Like-Kind Ben paid $30,000 for land that is needed by IBM. Ben owes $5,000 on a mortgage on the land. IBM will trade IBM stock worth $100,000 for the land and will assume the mortgage of $5,000. How much is the gain to be recognized by Ben as a result of this exchange?
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Asset Exchange by Ben Amount Value - IBM Stock received Ben's debt assumed by buyer Amount Realized by Ben Basis of Property Given Gain (Loss) Realized Gain (Loss) Recognized
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Asset Exchange by Ben Amount Value - IBM Stock received $100,000 Ben's debt assumed by buyer $5,000 Amount Realized by Ben $105,000 Basis of Property Given $30,000 Gain (Loss) Realized $75,000 Gain (Loss) Recognized $75,000
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This note was uploaded on 03/09/2012 for the course ACCT 6120 taught by Professor Godfrey,h during the Spring '08 term at UNC Charlotte.

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C12-Chp-04-1A-Corp-Formation-2012 - Chapter 4A. Corporate...

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