a. If the three exchanges are part of a pre-arranged plan, who will recognize a gain on the exchanges? . b. Now assume that Luciana and Jon exchanged their property for stock four years ago, while Clyde transfers his property for 350 shares in the current year. Clyde's transfer is not part of a pre-arranged plan with Luciana and Jon to incorporate their businesses. What gain will Clyde recognize on the transfer? Clyde will recognize a gain of $fill in the blank 296c92003f94f7f_1 on the transfer. c. Returning to the original facts, assume the property that Clyde contributes has a basis of $490,000 (instead of $90,000). Why would it be better from a tax perspective for Clyde to wait to transfer his property rather than be a part of Luciana's and Jon's transfers?
Luciana, Jon, and Clyde incorporate their respective businesses and form Starling Corporation. On March 1 of the current year, Luciana exchanges her property (basis of $50,000 and fair market value of $150,000) for 150 shares in Starling Corporation. On April 15, Jon exchanges his property (basis of $70,000 and fair market value of $500,000) for 500 shares in Starling. On May 10, Clyde transfers his property (basis of $90,000 and fair market value of $350,000) for 350 shares in Starling.
a. If the three exchanges are part of a pre-arranged plan, who will recognize a gain on the exchanges?
.
b. Now assume that Luciana and Jon exchanged their property for stock four years ago, while Clyde transfers his property for 350 shares in the current year. Clyde's transfer is not part of a pre-arranged plan with Luciana and Jon to incorporate their businesses. What gain will Clyde recognize on the transfer?
Clyde will recognize a gain of $fill in the blank 296c92003f94f7f_1 on the transfer.
c. Returning to the original facts, assume the property that Clyde contributes has a basis of $490,000 (instead of $90,000). Why would it be better from a tax perspective for Clyde to wait to transfer his property rather than be a part of Luciana's and Jon's transfers?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
