Question
Moe, Larry and Curly decide to form a new corporation, TS Corp.Moe and Larry contribute cash for their shares.Curly contributes his existing business.The fair market
Moe, Larry and Curly decide to form a new corporation, TS Corp.Moe and Larry contribute cash for their shares.Curly contributes his existing business.The fair market value of the assets contributed by Curly is $1,500,000.Curly's business has $300,000 in liabilities which will be assumed by TS Corp.Curly's tax basis in the assets contributed is $450,000.Assume the transaction is a Section 351 transaction.
1.How much gain or loss does Curly realize on the transaction?
2.How much gain or loss does Curly recognize on the transaction?
3.What is Curly's tax basis in his new TS Corp stock?
In addition to the shares of TS stock, Curly also receives $100,000 in cash from TS Corp as part of the transaction.Curly uses the cash to buy a boat.
4.How much gain or loss does Curly realize on the transaction?
5.How much gain or loss does Curly recognize on the transaction?
6.What is Curly's tax basis in his new TS Corp stock?
Instead of taking cash from TS Corp., Curly borrows $100,000 from a local bank.The $100,000 liability is assumed by TS Corp.
7.How much gain or loss does Curly realize on the transaction?
8.How much gain or loss does Curly recognize on the transaction?
9.What is Curly's tax basis in his new TS Corp stock?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started