Question 1) Simultaneous transfers
Albert Able, Brenda Baker, Carla Cox, and Dan Davis are all shareholders of Corporation A. Corporation A has 100 shares if capital stock outstanding. Able, Baker, and Cox each transferred property on February 11, 20*4 and each received 25 shares of capital stock. Dan Davis transferred property on July 17, 20*4 and received 25 shares of stock. Did the transactions satisfy the 80% control test? Explain.
Question 2) Nominal transfers
Albert Able owns all of the outstanding capital stock (80 shares, FMV $200,000) of Corporation A and desires to bring Betty Baker into the corporation. Betty Baker transfers an asset (FMV $ 50,000/ Basis $ 5,000) in exchange for 20 shares of capital stock. Is the control test satisfied? Explain.
Question 3) Loss of control
Anne Able incorporates her sole proprietorship by transferring assets in exchange for 100% of the corporate stock. Anne Able then gifts 14% to her son and sells 21% to a third party. Is the control test satisfied?
Question 4) Disproportion
Albert Able and his son create Corporation A. Albert Able transfers an asset (FMV $800) and receives 40 shares of capital stock. The son transfers an asset (FMV $200) and receives 60 shares of capital stock. Will IRC 351 apply?
Question 5) Boot
Albert Able and Brenda Baker create Corporation A. Albert Able transfers $ 4,000 cash and receive 40 shares of capital stock. Brenda Baker transfers an asset (FMV $7,000, Basis $2,000) and receives 60 shares of capital stock and $1,000 cash. Does IRC 351 govern? Explain.
Question 6) Boot
Albert Able transfers three assets in an IRC 351 exchange.
The total market value of the assets is $200,000 and the total basis is $170,000. Albert Able receives capital stock (FMV $160,000) and cash of $40,000. Does IRC 351 govern?
Explain.