C contributes to Z, a newly formed corporation, property worth $400 with a basis of...
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Accounting
C contributes to Z, a newly formed corporation, property worth $400 with a basis of $300 in exchange for 100 shares. D(an employee of C) contributes to Z property worth $100 with a basis of $40 in exchange for $400 shares.
a This is most likely not a good 351. C must recognize $100 of gain and D $50 of gain.
b. This is not a good 351 transaction because receipt of stock is disproportionate to the property contributed.
cThis is good 351 transaction. C and D will not recognize gain on the transfers to Z.
d C must have also transferred property to D (and employee after the incorporation). Most likely this would be a transfer of 300 shares to D. Gain to C would be $75
e C and D
Which is the correct answer?
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