Individual A owned appreciated property that Y Corporation wished to acquire for use in its business. To accomplish the transaction, a new corporation, Jones, was organized by Y transferring all of its assets and liabilities to Jones in exchange for some of its stock. At the same time, individual A transferred his properties to Jones in exchange for some of its stock. Following the transfer, A and Y Corporation owned all of Jones' single class of stock, but A, as an individual shareholder, failed to control Jones within the definition of Sec. 368(c). Y distributed the Jones stock to Y Corporation's shareholders in exchange for their outstanding stock. Jones continued to operate Y Corporation's pretransfer business activities. 

How would the transaction be treated for tax purposes?

 Will A qualify for the Sec. 351 deferral of gain?

Answer rating: 100% (QA)

The transaction described is a type of taxfree reorganization under Section 368a1B of the Internal R... View the full answer