Question
Maria has been operating a business as a sole proprietorship for several years. She needs additional capital and wants to incorporate her business. The assets
Maria has been operating a business as a sole proprietorship for several years. She needs additional capital and wants to incorporate her business. The assets of her business have a $400,000 adjusted basis and a $1.5 million FMV. Maria is willing to exchange the assets for 1500 shares of metro corporation stock, each having a $1000 FMV. Bill and John are each willing to invest $500,000 in Maria's business and will each receive 500 shares of stock.
Required:
Why is sec. 351 important to Maria?
Does it matter to Bill and John?
Step by Step Solution
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SOLUTION Section 351 of the Internal Revenue Code allows for a taxfree exchange of property for stock in a corporation if certain requirements are met ...
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Concepts In Federal Taxation
Authors: Kevin E. Murphy, Mark Higgins, Tonya K. Flesher
19th Edition
978-0324379556, 324379552, 978-1111579876
