Sec. 351 Requirements. Al, Bob, and Carl form West Corporation and transfer the following items to West:

The common stock has voting rights. The preferred stock does not.
a. Is the exchange nontaxable under Sec. 351? Explain the tax consequences of the exchange to Al, Bob, Carl, and West.

b. How would your answer to Part a change if Bob instead had received 200 shares of common stock and 200 shares of preferred stock?
c. How would your answer to Part a change if Carl instead had contributed $800 cash as well as services worth $6,700?

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Item Transferred Transferor's Shares Received Transferor Item by Transferor Basis FMV Al $25,000 25,000 7,500 1,000 common 250 preferred 300 common Patent Cash Services -0- $25,000 -0- Bob Carl