Individual A transferred accounts receivable that he was entitled to receive from providing services to a customer The accounts receivable had a basis of $0 and a fair market value of $25 A received 25 shares of X Corporation stock Individual B transferred equipment with a basis of $10 and a fair market value of $25 B received 25 shares of X Corporation stock Individual C transferred a building with a basis of $35 and a fair market value of $25 C received 25 shares of X Corporation stock Regarding individual A The following tax consequences result A Transferor recognizes gain because 351 is not applicable to accounts receivable and none of the Transferor's stock is counted towards the control threshold B A is transferring accounts receivables not generated because A performed services to transferee, and it is property and A is part of the control group for 351 purposes A will recognize no gain or loss on the transfer of the accounts receivable under section 351(a) As basis in the stock received will be zero As holding period in the stock will not include the holding period of the accounts receivable because it is not a capital asset or a section 1231 asset Corporation will not recognize gain or loss on the receipt of the accounts receivable Corporation will have a carryover basis in the accounts receivable of $0 C A is transferring accounts receivables not generated because A performed services to transferee, and it is property and A is part of the control group for 351 purposes A will recognize gain or loss on the transfer of the accounts receivable under section 351(a), because the accounts receivables are boot As basis in the stock received will be zero As holding period in the stock will not include the holding period of the accounts receivable because it is not a capital asset or a section 1231 asset Corporation will not recognize gain or loss on the receipt of the accounts receivable Corporation will have a carryover basis in the accounts receivable of $25 D Transferor recognizes gain because 351 is not applicable to accounts receivable but Transferor's stock is counted towards the control threshold

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Posted on Aug 07, 2024

Individual A transferred accounts receivable that he was entitled to receive from providing services to a customer. The accounts receivable had a basis of $0

Individual A transferred accounts receivable that he was entitled to receive from providing services to a customer. The accounts receivable had a basis of $0 and a fair market value of $25. A received 25 shares of X Corporation stock. Individual B transferred equipment with a basis of $10 and a fair market value of $25. B received 25 shares of X Corporation stock. Individual C transferred a building with a basis of $35 and a fair market value of $25. C received 25 shares of X Corporation stock.

Regarding individual A: The following tax consequences result

	A.	Transferor recognizes gain because 351 is not applicable to accounts receivable and none of the Transferor's stock is counted towards the control threshold
	B.	A is transferring accounts receivables not generated because A performed services to transferee, and it is property and A is part of the control group for 351 purposes. A will recognize no gain or loss on the transfer of the accounts receivable under section 351(a). As basis in the stock received will be zero. As holding period in the stock will not include the holding period of the accounts receivable because it is not a capital asset or a section 1231 asset. Corporation will not recognize gain or loss on the receipt of the accounts receivable. Corporation will have a carryover basis in the accounts receivable of $0.
	C.	A is transferring accounts receivables not generated because A performed services to transferee, and it is property and A is part of the control group for 351 purposes. A will recognize gain or loss on the transfer of the accounts receivable under section 351(a), because the accounts receivables are boot. As basis in the stock received will be zero. As holding period in the stock will not include the holding period of the accounts receivable because it is not a capital asset or a section 1231 asset. Corporation will not recognize gain or loss on the receipt of the accounts receivable. Corporation will have a carryover basis in the accounts receivable of $25.
	D.	Transferor recognizes gain because 351 is not applicable to accounts receivable but Transferor's stock is counted towards the control threshold