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Paul, Randy, and Steve form North Corporation by transferring the following properties:AdjustedTransferor’sConsiderationTransferorAssetBasisFMVReceivedPaulMachinery$10,000$12,50025 shares North stockRandyLand
$18,000$25,00040 shares North stockand $5,000 North noteSteveCash$17,500$17,50035 shares North stock(The 100 shares represent all of the outstanding stock of North Corporation.)Using the rules for Sec. 351, which of the following is correct?A.The exchange qualifies for Sec. 351 and is nontaxable except that Randy must recognize $7,000 of capital gain.B.The exchange does not qualify for Sec. 351 nontaxable treatment.C.The exchange qualifies for Sec. 351 and is nontaxable except that Randy must recognize $5,000 of capital gain.The exchange qualifies for Sec. 351 and is nontaxable except that Randy must recognize $5,000 of ordinary income.D.You transfer property with an adjusted basis of $20,000 and a fair market value of $31,000 in exchange for 100% of the stock in a new corporation. You receive 100 shares of stock having a fair market value of $16,000 and $10,000 in cash. The corporation also assumes a $5,000 mortgage on the property. Which of the following is correct?Shale, a C corporation, made two liquidating distributions of $1,000 on January 9, 2017, and February 13, 2017, to shareholder Patricia. Shale must file Form 1099-DIV, Dividends and Distributions, with the Internal Revenue Service by
CHECKDuring 2017, Mr. Hill and Mr. Dale formed a corporation to which Hill transferred a patent right that had a fair market value to him of $25,000 and a zero adjusted basis. Dale transferred a building that had a fair market value of $100,000 and an adjusted basis to him of $75,000. In return, Hill received 250 shares and Dale 750 shares of the corporation’s 1,000 outstanding shares of its only class of stock. As a result of this transaction, what should Mr. Dale report?