the same time as Y Co. contributed the $30 of cash to the subsidiary. Those siness assets directly to Y Sub Co. for Y Sub Co stock at transfers would have been protected by Section 351. Y Sub Co. could have then transferred its assets to a newly formed X Sub Co. in a second tax-free Section 351 exchange. Thus, Revenue Ruling 2003-51 concludes that treating X Co.'s first transfer as within Section 351 is not inconsistent with consequence Apart fr solely in ex incorporatio considered a the purposes of that section. control grou But if a pers all that sh requiremer These Assume, fc new corpo percent of PROBLEM Consider whether the following transactions qualify under Section 351: (a) A and B are unrelated individuals. A forms Newco, Inc. on January 2 of the current year by transferring a capital asset with a basis of $10,000 and a value of $50,000 for all 50 shares of Newco common stock. On March 2, in an unrelated transaction, B transfers a capital asset with a basis of $1,000 and a value of $10,000 for 10 shares of Newco nonvoting preferred stock (that is not nonqualified preferred stock). (b) Same as (a), above, except the transfers by A and B were part of a single integrated plan. (c) Same as (b), above, except A transferred 25 of her 50 shares to her daughter, D, as a gift on March 5 (three days after B's transfer). What if A's gift to were on January 5? (d) Same as (b), above, except that two months after B's transfer, A sold 15 shares to E pursuant to a preexisting oral understanding, without which Newco would not have been formed. highly ap Investor, thus mus can qual perhaps, Life facile m provide property of the o issued compari services gambit to the genero 2. TRANSFERS OF "PROPERTY AND SERVICES that pr 1 (