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 gain of $100 and D $50 of gain. b. This is not a good 351 because receipt of stock is disproportionate to teh property contributed c. This is a good 351 transaction. C and D will not recognize gain on the transfers to Z. d. C must have also transferred property to D (an employee after the incorporation). Most likely this would be a transfer of 300 shares. D. gain to C would be $75 e. C and D