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Flashcards in Really Need to Learn Deck (5):

Section 351 is the non-taxable transfers
Section 358 is what happens when you get more than the stock back

I find this very confusing
See Question 1031


Sect 351 transfer of property to corporation and 358 get some stuff back in addition to stock.
Corps Basis = Owner's basis PLUS the MVU of whatever asset THE CORP GAVE UP in addition to the stock.

See next card

Jack transferred building to corporation with basis of $75K (MVU 130) for 80% of stock plus car with 25K book vu and $30K MVU. What is owner's recognized gain and basis to corporation.

Owner: General rule, the amount of boot is the recognized gain (not realized gain note teh difference.) It's the lesser of the boot or the realized gain, realized gain meaning actually how much money you maid.

Corp Basis = BVU of owner, plus the MVU of the boot paid


Just reiterating when someone exchanges something for stock and gets more than stock back:

Gain is usually Boot, never a loss, use MVU stock to see if what they realized (not recognized) is more than boot

So for example, you trade bldg with adjusted basis of 80K for stock worth 100K plus a car worth 30K, with basis to corp. of 25K.

So you got (always use MVU). 130K
U Gave UP (always use BVU). 80K
Gain Realized $50K
Book Realized $30K
Which is less = recognized Gain
Basis to Partnership is $80K plus $30K = $110
Cause he already paid taxes on the $30K


Exchange for Corporate Stock Boot Received
Who Uses BVU: Owner for what ?
Who Uses MVU: Owner for what?
What's the corps basis in the asset it got from the owner?

BVU for What Owner Gave Up
MVU for What Owner Got
Compare realized to boot, recognize whatever is less as gain (never recognize loss)
Add that recognition to owners's bvu of asset to get corporate cvu


When Owner transfers liability?
What Owner Gave UP - Liability
What he Got @ MVU
Don't recognize GAin in assumption of liability, it just reduces stock basis 358a
Corporation (362a) recognition @ bvu of
Example on Back

Owner Gave Up: Land with basis of 40K and liability of 35K
Got: Stock worth 60K

So no gain recognized on transfer of liability
Instead just use it to reduce basis in stock which would be 5K
Corporation CVU: BVU of Owner, no adjustment for assumption of liability