ch18 - 1. Section 351 (which permits transfers to...

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1. Section 351 (which permits transfers to controlled corporations to be tax deferred) can be justified under the wherewithal to pay concept. *a. True b. False 2. Similar to like-kind exchanges, the receipt of “boot” under § 351 can cause loss to be recognized. a. True *b. False 3. Tina incorporates her sole proprietorship with assets having a fair market value of $100,000 and an adjusted basis of $110,000. Even though § 351 applies, Tina may recognize her realized loss of $10,000. a. True *b. False 4. In a § 351 transfer, a shareholder receives boot of $10,000 but ends up with a realized loss of $3,000. Only $7,000 of the boot will be taxed to the shareholder. a. True *b. False 5. In a § 351 transfer, the receipt of boot is not taxed if the shareholder has a realized loss. *a. True b. False 6. In a § 351 transfer, gain will be recognized to the extent of the lesser of realized gain or the boot received. *a. True b. False 7. Allen transfers marketable securities with an adjusted basis of $120,000, fair market value of $300,000, for 85% of the stock of Heron Corporation. In addition, he receives cash of $40,000. Allen recognizes a capital gain of $40,000 on the transfer. *a. True b. False 8. The definition of property for purposes of § 351 includes unrealized
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receivables transferred by a cash basis taxpayer. *a. True b. False 9. The transfer of an installment obligation in a transaction qualifying under § 351 is a disposition of the obligation that causes gain to be recognized by the transferor. a. True *b. False 10. A secret process and patentable invention both constitute “property” for purposes of § 351. *a. True b. False 11. 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 12. 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 13. In a § 351 transaction, if a transferor receives consideration other than stock, the transaction can be taxable. *a. True b. False 14. 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 15. Jill transfers property worth $200,000 (basis of $190,000) to Blue Corporation. In return, she receives 80% of the stock in Blue
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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.
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This note was uploaded on 04/02/2012 for the course ECON 101 taught by Professor Sing during the Spring '12 term at CUNY Hunter.

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ch18 - 1. Section 351 (which permits transfers to...

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