Maria has been operating a business as a sole proprietorship for several years. She needs additional capital and wants to incorporate her business. The assets of her business have a $400,000 adjusted basis and a $1.5 million FMV. Maria is willing to exchange the assets for 1500 shares of metro corporation stock, each having a $1000 FMV. Bill and John are each willing to invest $500,000 in Maria's business and will each receive 500 shares of stock. 

Required:

Why is sec. 351 important to Maria?

 Does it matter to Bill and John?

Answer rating: 100% (QA)

SOLUTION Section 351 of the Internal Revenue Code allows for a taxfree exchange of property for stock in a corporation if certain requirements are met ... View the full answer