Question 1

A shareholder contributes land to his wholly owned corporation but receives no stock in return. The corporation has a zero basis in the land.

Accepted Answer

A) True 
 B)False

Question 2

Wren Corporation a minority shareholder in Lark Corporation)  has made loans to Lark Corporation that become worthless in the current year.

Accepted Answer

A)   Wren Corporation is not permitted a deduction for the loans.
B)   The loans result in a nonbusiness bad debt deduction to Wren Corporation.
C)   The loans provide Wren Corporation with a business bad debt deduction.
D)   Wren claims a capital loss due to the uncollectible loans.
E)   None of these.F) B) and C)
G) C) and E)

Question 3

Mitchell and Powell form Green Corporation. Mitchell transfers property basis of $105,000 and fair market value of $90,000)  while Powell transfers land basis of $8,000 and fair market value of $75,000)  and $15,000 of cash. Each receives 50% of Green Corporation's stock total value of $180,000) . As a result of these transfers:

Accepted Answer

A)   Mitchell has a recognized loss of $15,000, and Powell has a recognized gain of $67,000.
B)   Neither Mitchell nor Powell has any recognized gain or loss.
C)   Mitchell has no recognized loss, but Powell has a recognized gain of $15,000.
D)   Green Corporation will have a basis in the land of $23,000.
E)   None of these.F) A) and B)
G) A) and C)

Question 4

Similar to like-kind exchanges, the receipt of "boot" under § 351 can cause loss to be recognized.

Accepted Answer

A) True 
 B)False

Question 5

What are the tax consequences if an individual investor incurs a loss on the following:
a. Stock that is not § 1244 stock.
b. Stock that is § 1244 stock.
c. A corporate bond.
d. An uncollectible loan made to a corporation.

Accepted Answer

a. Stock that is not § 1244 stock: If st...

Question 6

The transfer of an installment obligation in a transaction qualifying under § 351 is a disposition of the obligation that causes gain to be recognized by the transferor.

Accepted Answer

A) True 
 B)False

Question 7

Ira, a calendar year taxpayer, purchases as an investment stock in Redbird Corporation on November 3, 2018. On February 2, 2019, Redbird Corporation is declared bankrupt, and Ira's stock becomes worthless. Presuming § 1244 stock in a small business corporation) does not apply, Ira has a short-term capital loss for 2019.

Accepted Answer

A) True 
 B)False

Question 8

One month after Sally incorporates her sole proprietorship, she gives 25% of the stock to her children. Section 351 cannot apply to Sally because she has not satisfied the 80% control requirement.

Accepted Answer

A) True 
 B)False

Exam 4: Corporations: Organization and Capital Structure

Similar to like-kind exchanges, the receipt of "boot" under § 351 can cause loss to be recognized.

Correct Answer
verified

A shareholder contributes land to his wholly owned corporation but receives no stock in return. The corporation has a zero basis in the land.

Correct Answer
verified

One month after Sally incorporates her sole proprietorship, she gives 25% of the stock to her children. Section 351 cannot apply to Sally because she has not satisfied the 80% control requirement.

Correct Answer
verified

Correct Answer
verified

What are the tax consequences if an individual investor incurs a loss on the following: a. Stock that is not § 1244 stock. b. Stock that is § 1244 stock. c. A corporate bond. d. An uncollectible loan made to a corporation.

Correct Answer
verified
a. Stock that is not § 1244 stock: If st...
View Answer

The transfer of an installment obligation in a transaction qualifying under § 351 is a disposition of the obligation that causes gain to be recognized by the transferor.

Correct Answer
verified

Correct Answer
verified

Wren Corporation a minority shareholder in Lark Corporation) has made loans to Lark Corporation that become worthless in the current year.

Correct Answer
verified

Exam 4: Corporations: Organization and Capital Structure

Similar to like-kind exchanges, the receipt of "boot" under § 351 can cause loss to be recognized.

Correct AnswerverifiedShow Answer

A shareholder contributes land to his wholly owned corporation but receives no stock in return. The corporation has a zero basis in the land.

Correct AnswerverifiedShow Answer

One month after Sally incorporates her sole proprietorship, she gives 25% of the stock to her children. Section 351 cannot apply to Sally because she has not satisfied the 80% control requirement.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What are the tax consequences if an individual investor incurs a loss on the following: a. Stock that is not § 1244 stock. b. Stock that is § 1244 stock. c. A corporate bond. d. An uncollectible loan made to a corporation.

Correct Answerverifieda. Stock that is not § 1244 stock: If st...View AnswerShow Answer

The transfer of an installment obligation in a transaction qualifying under § 351 is a disposition of the obligation that causes gain to be recognized by the transferor.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Wren Corporation a minority shareholder in Lark Corporation) has made loans to Lark Corporation that become worthless in the current year.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a. Stock that is not § 1244 stock: If st...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified