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.
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. Curlys business has $300,000 in liabilities which will be assumed by TS Corp. Curlys tax basis in the assets contributed is $450,000. Assume the transaction is a Section 351 transaction.
- How much gain or loss does Curly realize on the transaction?
- How much gain or loss does Curly recognize on the transaction?
- What is Curlys 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.
- How much gain or loss does Curly realize on the transaction?
- How much gain or loss does Curly recognize on the transaction?
- What is Curlys 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.
- How much gain or loss does Curly realize on the transaction?
- How much gain or loss does Curly recognize on the transaction?
- What is Curlys tax basis in his new TS Corp stock?
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Financial Management Principles And Applications
Authors: J William Petty, Sheridan Titman, Arthur J Keown, John D Martin, Peter Martin, Michael Burrow, Hoa Nguyen
6th Edition
1442539178, 9781442539174
