What is A's basis in her shares of NEWCO, assuming the contributions meet all the requirements of IRC 351? a. A’s basis for her stock is 80,000, same as B. b. A’s basis for her stock is 10,000, i.e., a substituted basis. c. A's basis for her stock is zero because the company has not generated E&P A. A’s basis for her stock is 100, which is equal to the number of shares she received.
Individuals A and B are planning to form a new corporation: NEWCO. A will contribute to NEWCO several high-end super computers with a combined, fair market value of 80,000. A's adjusted basis in these computers is 10,000. B will contribute to NEWCO 80,000 of cash. NEWCO will issue to each of A and B, 100 shares of voting common stock in exchange for the property and cash contributed. Consequently, there will be 200 common shares outstanding with a total initial value of $160,000?
What is A's basis in her shares of NEWCO, assuming the contributions meet all the requirements of IRC 351?
a. A’s basis for her stock is 80,000, same as B.
b. A’s basis for her stock is 10,000, i.e., a substituted basis.
c. A's basis for her stock is zero because the company has not generated E&P
A. A’s basis for her stock is 100, which is equal to the number of shares she received.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
