[GaGirl82]

Hi can someone please help me answer the question below? I am completely lost.

Lynn Jones, Shawn, Walt and Donna are trying to decide whether they should organize a corporation and transfer their shares of stock in the several corporations to this new corporation. All of their shares are listed on the New York Stock Exchange and are readily marketable. Lynn would transfer shares into Brown Corporation, Shawn would transfer stock into Rust Corporation, Walt would transfer stock in White Corporation, and Donna would transfer stock in several corporations. The stock would be held by the newly formed corporation for investment purposes. Lynn asks you, her tax adviser, whether she would have a gain on the transfer of her substantially appreciated shares in Brown Corporation if she transferred the shares to the newly formed corporation. Please advise Lynn.

[alloverit]

Gains and losses are never recognized upon transfer of stock into a C or S Corp if the contributor is in control of the corporation immediately after the transfer. You should review the 80% rule as I'm fairly certain that is what the question is testing.

The transfer is not taxable if the shareholders transfer property solely in exchange for stock and, immediately after the exchange, the contributing shareholders own at least 80 percent of the total combined voting power of all classes of stock entitled to vote and at least 80 percent of the total number of shares of all other classes of stock.

FAR 81

AUD 83

BEC 93

REG 84

Ross

[Tncincy]

I think Alloverit provided an excellent answer. I am looking up the concept of question in my ninja book, I am currently studying reg and I am writing this down, in case I see it again.

It begins with a 75
Been here too long as a cheerleader.....time to pass

It begins with a 75
Been here too long as a cheerleader....ready to pass

[Author]

Replies