For the last five years, Ava and Flipo each have owned 30 of the 60 outstanding shares of Zombie Corporation stock. Ava transfers land having a $4,500 basis and a(n) $10,500 fair market value (FMV) to Zombie for an additional 15 shares of Zombie stock. Flipo transfers $700 cash to Zombie for one additional share f Zombie stock. Read the requirement. C What amount of the gain or loss must Ava recognize on the exchange? (Enter a 0 if no gain is realized and/or recognized. Use a minus sign or parentheses for a loss.) Realized gain (loss) = Recognized gain (loss) = If the transaction does not meet the Sec. 351 requirements, suggest ways in which it can be structured so as to meet these requirements. O A. Ava must receive more than a nominal amount of stock in exchange for her property. If Ava obtained additional stock worth at least 80% of the value of the stock she already owned (i.e., at least 24 shares of stock in exchange for $16,800), her stock likely would be counted for control purposes, and the Sec. 351 requirements would be met. OB. Flipo must receive more than a nominal amount of stock in exchange for his property. If Flipo obtained additional stock worth at least 10% of the value of the stock he already owned (i.e., at least 3 shares of stock in exchange for $2,100), his stock likely would be counted for control purposes, and the Sec. 351 requirements would be met. OC. The transaction, as it is currently structured, meets the Sec. 351 requirements. O D. Flipo must receive the exact amount of stock as Ava in exchange for property with the exact same value as the property contributed by Ava in order to meet the Sec. 351 requirements.
For the last five years, Ava and Flipo each have owned 30 of the 60 outstanding shares of Zombie Corporation stock. Ava transfers land having a $4,500 basis and a(n) $10,500 fair market value (FMV) to Zombie for an additional 15 shares of Zombie stock. Flipo transfers $700 cash to Zombie for one additional share f Zombie stock. Read the requirement. C What amount of the gain or loss must Ava recognize on the exchange? (Enter a 0 if no gain is realized and/or recognized. Use a minus sign or parentheses for a loss.) Realized gain (loss) = Recognized gain (loss) = If the transaction does not meet the Sec. 351 requirements, suggest ways in which it can be structured so as to meet these requirements. O A. Ava must receive more than a nominal amount of stock in exchange for her property. If Ava obtained additional stock worth at least 80% of the value of the stock she already owned (i.e., at least 24 shares of stock in exchange for $16,800), her stock likely would be counted for control purposes, and the Sec. 351 requirements would be met. OB. Flipo must receive more than a nominal amount of stock in exchange for his property. If Flipo obtained additional stock worth at least 10% of the value of the stock he already owned (i.e., at least 3 shares of stock in exchange for $2,100), his stock likely would be counted for control purposes, and the Sec. 351 requirements would be met. OC. The transaction, as it is currently structured, meets the Sec. 351 requirements. O D. Flipo must receive the exact amount of stock as Ava in exchange for property with the exact same value as the property contributed by Ava in order to meet the Sec. 351 requirements.
Chapter20: Corporations And Parterships
Section: Chapter Questions
Problem 46P
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Transcribed Image Text:For the last five years, Ava and Flipo each have owned 30 of the 60 outstanding shares of Zombie Corporation stock. Ava transfers land having a $4,500 basis and a(n) $10,500 fair market value (FMV) to
Zombie for an additional 15 shares of Zombie stock. Flipo transfers $700 cash to Zombie for one additional share of Zombie stock.
Read the requirement.
What amount of the gain or loss must Ava recognize on the exchange? (Enter a 0 if no gain is realized and/or recognized. Use a minus sign or parentheses for a loss.)
Realized gain (loss) =
Recognized gain (loss) =
If the transaction does not meet the Sec. 351 requirements, suggest ways in which it can be structured so as to meet these requirements.
O A. Ava must receive more than a nominal amount of stock in exchange for her property. If Ava obtained additional stock worth at least 80% of the value of the stock she already owned (i.e., at least 24
shares of stock in exchange for $16,800), her stock likely would be counted for control purposes, and the Sec. 351 requirements would be met.
B. Flipo must receive more than a nominal amount of stock in exchange for his property. If Flipo obtained additional stock worth at least 10% of the value of the stock he already owned (i.e., at least 3
shares of stock in exchange for $2,100), his stock likely would be counted for control purposes, and the Sec. 351 requirements would be met.
C. The transaction, as it is currently structured, meets the Sec. 351 requirements.
D. Flipo must receive the exact amount of stock as Ava in exchange for property with the exact same value as the property contributed by Ava in order to meet the Sec. 351 requirements.
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