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Part 1

KeithKeith

and

DenaDena

own

220220

and

120120

shares, respectively, of

PolyPoly

Corporation stock, which represent all the shares outstanding. The current market value per share is

$ 24$24.

PolyPoly

needs capital to expand its operations, and

DenaDena

is willing to contribute to

PolyPoly

silver bullion against which the corporation can borrow operating funds.

DenaDena

purchased the bullion 12 years ago, when its cost was a fraction of its current market value.

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Part 1

How many additional shares must Dena receive in exchange for the bullion to avoid recognizing a gain?
What value of silver bullion should she contribute to Poly in exchange for additional shares?

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Requirement

If

DenaDena

wants to avoid recognizing a gain upon transferring the bullion to the corporation, how many additional shares must she receive in exchange for the bullion, and what value of silver bullion should she contribute to

PolyPoly

in exchange for additional shares? Hint:

DenaDena

needs to achieve 80% control of the corporation.

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