On February 2, Mr. Eugene Pomeroy transferred all the assets of his sole proprietorship (Pomeroy’s Ski Shop) to a newly created corporation, Pomeroy Ski Inc. In exchange for the business assets, Mr. Pomeroy received all 1,000 shares of the corporation’s newly issued voting common stock. On February 3, Mr. Pomeroy gave 100 shares of this stock to each of his five children and three grandchildren, leaving him with 200 shares. Does Mr. Pomeroy’s exchange of business assets for corporate stock qualify as a nontax-able exchange even though he reduced his ownership interest from 100 percent to only 20 percent on the day after Pomeroy Ski Inc. was incorporated?
Answer to relevant QuestionsOn April 1, 2016, Bullen Company transferred machinery used in its business to Eaton Inc. in exchange for Eaton common stock. Both Bullen and Eaton use the calendar year for tax purposes. Bullen’s exchange of property for ...Croyden is a calendar year, accrual basis corporation. Mr. and Mrs. Croyden (cash basis taxpayers) are the sole corporate shareholders. Mr. Croyden is president and Mrs. Croyden is vice president of the corporation. ...Corporation ABC sold its interest in KK Partnership on October 9 for $150,000. KK Partnership uses a calendar year for tax purposes. Explain the reason why Corporation ABC cannot compute gain or loss realized on the date ...Jane is a self-employed attorney. This year, her net profit exceeded $350,000, which put her in the 39.6 percent tax bracket. Early in the year, Jane hired Ben as a paralegal and paid him a $33,000 salary. a. Compute the ...Rhea is a self-employed professional singer. She resides in a rented apartment and uses one room exclusively as a business office. This room includes 225 of the 1,500 square feet of living space in the apartment. Rhea ...
Post your question