Corporate Taxation Ch 19 Reading Quiz
1. The definition of property as it relates to a section 351 transaction includes money. (TRUE)
2. A taxpayer always will have a tax basis in boot received in a section 351 transaction equal to its fair market value. (TRUE)
3. Mandel transferred property to his new corporation in a section 351 transaction. One of the properties transferred was land with a fair market value of $200,000 and a tax basis of $250,000. The corporation will always take a tax basis in the land of $200,000 to prevent the “built-in loss” from being transferred from Mandel to the corporation. (FALSE)
4. Han transferred land to his corporation in a section 351 transaction. Han had held the land for two years prior to the transfer. The corporation will tack Han’s holding period for the land. (TRUE)
5. Roberta transfers property with a tax basis of $400 and a fair market value of $500 to a corporation in exchange for stock with a fair market value of $350 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $150 on the property transferred. What is the amount realized by Roberta in the exchange? ($500)
6. Antoine transfers property with a tax basis of $500 and a fair market value of $600 to a corporation in exchange for stock with a fair market value of $550 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $50 on the property transferred. What is Antoine’s tax basis in the stock received in the exchange? ($450)
7. Carlos transfers property with a tax basis of $500 and a fair market value of $800 to a corporation in exchange for stock with a fair market value of $650 and $50 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $100 on the property transferred. What is the corporation’s tax basis in the property received in the exchange? ($550)
8. Tristan transfers property with a tax basis of $900 and a fair market value of $1,200 to a
2. A taxpayer always will have a tax basis in boot received in a section 351 transaction equal to its fair market value. (TRUE)
3. Mandel transferred property to his new corporation in a section 351 transaction. One of the properties transferred was land with a fair market value of $200,000 and a tax basis of $250,000. The corporation will always take a tax basis in the land of $200,000 to prevent the “built-in loss” from being transferred from Mandel to the corporation. (FALSE)
4. Han transferred land to his corporation in a section 351 transaction. Han had held the land for two years prior to the transfer. The corporation will tack Han’s holding period for the land. (TRUE)
5. Roberta transfers property with a tax basis of $400 and a fair market value of $500 to a corporation in exchange for stock with a fair market value of $350 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $150 on the property transferred. What is the amount realized by Roberta in the exchange? ($500)
6. Antoine transfers property with a tax basis of $500 and a fair market value of $600 to a corporation in exchange for stock with a fair market value of $550 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $50 on the property transferred. What is Antoine’s tax basis in the stock received in the exchange? ($450)
7. Carlos transfers property with a tax basis of $500 and a fair market value of $800 to a corporation in exchange for stock with a fair market value of $650 and $50 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $100 on the property transferred. What is the corporation’s tax basis in the property received in the exchange? ($550)
8. Tristan transfers property with a tax basis of $900 and a fair market value of $1,200 to a