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Dan, a lawyer, owns real estate with a basis of $10,000 and a fair market value of $18,000. Elite has outstanding 100 shares, all held
Dan, a lawyer, owns real estate with a basis of $10,000 and a fair market value of $18,000. Elite has outstanding 100 shares, all held by Mr.Able. Alite issues 400 additional shared of its common stock (having a fair market value of $18,000) to Dan in exchange for his property worth $18,000 a. Dan does not qualify for IRC section 351 treatment because he has transferred his property to Elite in a seperate and distinct transaction from MR. Able b. Dan qualifies for Section 351 treatment because the acquired "control" of Elite and Mr. Able must file amendment returns covering his previous transfers to Elit due to his loss of control c. The gain realized on the transfer is recognized in full by Dan because he occasionally renders legal services to Elite d. The transfer is not taxable to Dan or Elit due to the application of Section 351 and 1032
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