Corporate Cheat Sheet Exam 2

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  • Topic: Debt, Bad debt, Tax
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  • Published : April 12, 2013
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Chapter 4:
§ 1031: Like-kind exchange. Realized gain or loss is deferred until the property is sold. § 351: Gain or loss is not recognized from property exchanged for stock that results in corp control 80%. (Cash or boot is still recognized; stock”qualified preferred, stock rights, stock warranties)(Transferor must transfer prop10% services) §357(a):Liability in §351, liab not treated as boot for gain recognition purposes. (S/H basis, boot is included; Corporation basis, reduced by liab assumed) §357(b):If liab incurred to avoid tax or no business purpose, liab = boot. (stock+liab=total amount realized-basis=Realized Gain) (Dominates over C) §357(c): liab>adjusted basis of prop, excess is taxable gain. (Bases+gain-boot-liab=Basis in stock received) *If S/H receives other property with the stock, its basis is FMV. *S/H basis=adj basis prop x-fered+gain-boot(incl liab)-adj loss prop(election) *Corp basis=adj basis prop x-fered+gain-adj loss prop

*FMV stock received+boot-basis prop=realized gain; recognized gain= lesser of boot or realized;basis of stock S/H=basis-boot+recognized gain. *Income from stock is not taxed. Capital Contributions aren’t taxed. §385: Thin Capitalization, corp debt vs. equity. (No Regulations) §165: Loss can be taken for worthlessness.

*Business bad debts=ordinary losses, non-business bad debt=short-term cap loss. *Business bad debt can NOL or partial worthless, non-business cannot. *Nonbusiness bad debt=noncorp, but all business bad debts of corp qualify for business. §1244: Permits ordinary loss on worthless stock of small business corp. (5,000 single, 100,000 married; stock losses status after sale or donation) §1202: 50% of gain from small bus stock may be excluded.
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