ThomasThomas

and

SabrinaSabrina

own

320320

and

280280

shares, respectively, of

CaptronCaptron

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

$ 27$27.

CaptronCaptron

needs capital to expand its operations, and

SabrinaSabrina

is willing to contribute to

CaptronCaptron

silver bullion against which the corporation can borrow operating funds.

SabrinaSabrina

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 Sabrina receive in exchange for the bullion to avoid recognizing a gain?
What value of silver bullion should she contribute to Captron in exchange for additional shares?

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Requirement

If

SabrinaSabrina

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

CaptronCaptron

in exchange for additional shares? Hint:

SabrinaSabrina

needs to achieve 80% control of the corporation.

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