Section 351 - Requirements Your long term clients and married couple, David and Diana started D&D Corporation. D&D Corporation is a service based company and has been successful since its inception! There are a total of 1,000 shares, of which David and Diana equally own 500 shares. In the current year, David transferred property worth $80,000 to D&D for an additional 50 shares. 1. Does Sec. 351 apply to property transfers to an existing corporation? 2. Does Sec. 351 apply to the scenario above? Explain why or why not. 3. If not, what can be done to qualify the transaction for Sec. 351 treatment? If all questions in bold are not answered, full credit will not be given.
Section 351 - Requirements Your long term clients and married couple, David and Diana started D&D Corporation. D&D Corporation is a service based company and has been successful since its inception! There are a total of 1,000 shares, of which David and Diana equally own 500 shares. In the current year, David transferred property worth $80,000 to D&D for an additional 50 shares. 1. Does Sec. 351 apply to property transfers to an existing corporation? 2. Does Sec. 351 apply to the scenario above? Explain why or why not. 3. If not, what can be done to qualify the transaction for Sec. 351 treatment? If all questions in bold are not answered, full credit will not be given.
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter12: Corporations: Organization, Capital Structure, And Operating Rules
Section: Chapter Questions
Problem 19P
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Transcribed Image Text:Section 351 - Requirements
Your long term clients and married couple, David and Diana started D&D Corporation. D&D Corporation is a service based company
and has been successful since its inception!
There are a total of 1,000 shares, of which David and Diana equally own 500 shares. In the current year, David transferred property
worth $80,000 to D&D for an additional 50 shares.
1. Does Sec. 351 apply to property transfers to an existing corporation?
2. Does Sec. 351 apply to the scenario above? Explain why or why not.
3. If not, what can be done to qualify the transaction for Sec. 351 treatment?
If all questions in bold are not answered, full credit will not be given.
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