Question 1

The transfer of an installment obligation in a transaction qualifying under § 351 is a disposition of the obligation that causes gain to be recognized by the transferor.

Accepted Answer

A) True 
 B)False

Question 2

Similar to like-kind exchanges, the receipt of "boot" under § 351 can cause loss to be recognized.

Accepted Answer

A) True 
 B)False

Question 3

Wren Corporation a minority shareholder in Lark Corporation)  has made loans to Lark Corporation that become worthless in the current year.

Accepted Answer

A)   Wren Corporation is not permitted a deduction for the loans.
B)   The loans result in a nonbusiness bad debt deduction to Wren Corporation.
C)   The loans provide Wren Corporation with a business bad debt deduction.
D)   Wren claims a capital loss due to the uncollectible loans.
E)   None of these.F) A) and B)
G) A) and C)

Question 4

What are the tax consequences if an individual investor incurs a loss on the following:
a. Stock that is not § 1244 stock.
b. Stock that is § 1244 stock.
c. A corporate bond.
d. An uncollectible loan made to a corporation.

Accepted Answer

a. Stock that is not § 1244 stock: If st...

Question 5

One month after Sally incorporates her sole proprietorship, she gives 25% of the stock to her children. Section 351 cannot apply to Sally because she has not satisfied the 80% control requirement.

Accepted Answer

A) True 
 B)False

Question 6

Mitchell and Powell form Green Corporation. Mitchell transfers property basis of $105,000 and fair market value of $90,000)  while Powell transfers land basis of $8,000 and fair market value of $75,000)  and $15,000 of cash. Each receives 50% of Green Corporation's stock total value of $180,000) . As a result of these transfers:

Accepted Answer

A)   Mitchell has a recognized loss of $15,000, and Powell has a recognized gain of $67,000.
B)   Neither Mitchell nor Powell has any recognized gain or loss.
C)   Mitchell has no recognized loss, but Powell has a recognized gain of $15,000.
D)   Green Corporation will have a basis in the land of $23,000.
E)   None of these.F) C) and D)
G) All of the above

Question 7

Ira, a calendar year taxpayer, purchases as an investment stock in Redbird Corporation on November 3, 2018. On February 2, 2019, Redbird Corporation is declared bankrupt, and Ira's stock becomes worthless. Presuming § 1244 stock in a small business corporation) does not apply, Ira has a short-term capital loss for 2019.

Accepted Answer

A) True 
 B)False

Question 8

A shareholder contributes land to his wholly owned corporation but receives no stock in return. The corporation has a zero basis in the land.

Accepted Answer

A) True 
 B)False

Exam 4: Corporations: Organization and Capital Structure

What are the tax consequences if an individual investor incurs a loss on the following: a. Stock that is not § 1244 stock. b. Stock that is § 1244 stock. c. A corporate bond. d. An uncollectible loan made to a corporation.

Correct Answer
verified
a. Stock that is not § 1244 stock: If st...
View Answer

The transfer of an installment obligation in a transaction qualifying under § 351 is a disposition of the obligation that causes gain to be recognized by the transferor.

Correct Answer
verified

A shareholder contributes land to his wholly owned corporation but receives no stock in return. The corporation has a zero basis in the land.

Correct Answer
verified

Correct Answer
verified

One month after Sally incorporates her sole proprietorship, she gives 25% of the stock to her children. Section 351 cannot apply to Sally because she has not satisfied the 80% control requirement.

Correct Answer
verified

Wren Corporation a minority shareholder in Lark Corporation) has made loans to Lark Corporation that become worthless in the current year.

Correct Answer
verified

Similar to like-kind exchanges, the receipt of "boot" under § 351 can cause loss to be recognized.

Correct Answer
verified

Correct Answer
verified

Exam 4: Corporations: Organization and Capital Structure

What are the tax consequences if an individual investor incurs a loss on the following: a. Stock that is not § 1244 stock. b. Stock that is § 1244 stock. c. A corporate bond. d. An uncollectible loan made to a corporation.

Correct Answerverifieda. Stock that is not § 1244 stock: If st...View AnswerShow Answer

The transfer of an installment obligation in a transaction qualifying under § 351 is a disposition of the obligation that causes gain to be recognized by the transferor.

Correct AnswerverifiedShow Answer

A shareholder contributes land to his wholly owned corporation but receives no stock in return. The corporation has a zero basis in the land.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One month after Sally incorporates her sole proprietorship, she gives 25% of the stock to her children. Section 351 cannot apply to Sally because she has not satisfied the 80% control requirement.

Correct AnswerverifiedShow Answer

Wren Corporation a minority shareholder in Lark Corporation) has made loans to Lark Corporation that become worthless in the current year.

Correct AnswerverifiedShow Answer

Similar to like-kind exchanges, the receipt of "boot" under § 351 can cause loss to be recognized.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified
a. Stock that is not § 1244 stock: If st...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified