Corporate Taxation - Transfers to a Controlled Corporation

Question 1

T/F

Generally, no gain or loss is recognized if property is transferred to a corporation solely in exchange for stock, if immediately after the transfer, the transferors of property are in control of the corporation

Answer 1

TRUE

Question 2

“Control” of a corporation means that the transferors of property must, in the aggregate, own at least ____ of the corporation’s stock immediately after the exchange. When this occurs, the requirements for nonrecognition of gain/loss are met.

Answer 2

80%

Question 3

What is Sec. 351?

Answer 3

Sec. 351 outlines the requirements for nonrecognition of gain/loss (that no gain/loss is recognized if property is transferred to a corporation solely in exchange for stock, if immediately after the transfer, the transferors of property are in control of the corporation)

Question 4

T/F

Services are included under the nonrecognition provision of Sec. 351

Answer 4

FALSE

Sec. 351 is for property. As services do not fall under the definition of property, services do not fall under the nonrecognition provision of Sec. 351