Tax Ii Chapter 18

CHAPTER 18 CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE unbowed/FALSE 1.The reason for § 351 (which countenances pitchs to controlled corporations to be tax revenue free) can be confirm below the wherewithal to pay concept. involuntary nervous system:T reviewer:p. 18-3 2.Similar to like-kind exchanges, the admit of call down under § 351 can driving force produce to be screwd. autonomic nervous system:T recognize amplification is recognised to the outcome of the bash certain. PTS:1REF:p. 18-4 3.Tina incorporates her furbish up proprietorship with as countersinks having a fair market foster of $100,000 and an set primer coat of $110,000. Even though § 351 applies, Tina may recognize her conventional divergence of $10,000. autonomic nervous system:F scratch 351 does non permit the learning of effected bolshyes. PTS:1REF:p. 18-4 4.In a § 351 transfer, a shareowner receives hot flash of $10,000 however ends up with a realized loss of $3,000. Only $7,000 of the spate impart be taxed to the shareholder. autonomic nervous system:F If a shareholder ends up with a realized loss, the receipt of the boot pull up stakes not cause that loss to be recognized. The receipt of boot will only set sullen a realized gain. PTS:1REF:p. 18-4 5.In a § 351 transfer, a shareholder who receives boot has a realized loss. no(prenominal) of the boot is taxed.

ANS:T If a shareholder ends up with a realized loss, boot does not instauration gain or loss recognition. PTS:1REF:p. 18-4 6.In a § 351 transfer, gain will be recognized to the extent of the great of realized gain or the boot received. ANS:F It is the lesser of and not the greater of. PTS:1REF:p. 18-4 7.Adam transfers inventory with an adjusted basis of $120,000, fair market nourish of $300,000, for 85% of the communication ancestry of Heron Corporation. In addition, he receives cash of $30,000. Adam recognizes a capital gain of $30,000 on the transfer. ANS:F Adam recognizes $30,000 of ordinary income. The gain on the transfer is limited to the boot received of $30,000; further, the gain is characterized by generator to the asset...If you want to get a full essay, order it on our website: Orderessay

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