Regulation 3 PassMaster Questions

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Unformatted text preview: edits and the alternative minimum tax should be taken into account. Choices "a", "b", and "c" are incorrect. Each of theses answers treats one of the above items incorrectly. CPA-02142 Type1 M/C A-D Corr Ans: D PM#67 R 3-01 50. CPA-02142 PII Nov 93 #45 Page 3 22 © 2009 DeVry/Becker Educational Development Corp. All rights reserved. Maxixishere Pdf Collection Becker CPA Review, PassMaster Questions Lecture: Regulation 3 Jones incorporated a sole proprietorship by exchanging all the proprietorship's assets for the stock of Nu Co., a new corporation. To qualify for tax-free incorporation, Jones must be in control of Nu immediately after the exchange. What percentage of Nu's stock must Jones own to qualify as "control" for this purpose? a. b. c. d. 50.00% 51.00% 66.67% 80.00% CPA-02142 Explanation Choice "d" is correct. Rule: In a tax-free incorporation, the percentage for "control" is 80%, (i.e., control exists if the transferor/shareholder owns at least 80% of the total voting power and at least 80% of the total number of shares of all other classes of stock...
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.

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