1. In a section 351 transaction, if a shareholder contributes appreciated property to a corporation in which...

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Question:

1. In a section 351 transaction, if a shareholder contributes appreciated property to a corporation in which he receives a controlling interest, (and may or may not receive “boot”) the shareholder will recognize taxable gain:

A. All the time

B. Some of the time

C. None of the time

D. Only when he disposes of his stock in the corporation

2. In a section 351 transaction, if a shareholder contributes depreciated property to a corporation in which he receives a controlling interest, the shareholder will recognize taxable loss:

A. All the time

B. Some of the time

C. None of the time

D. Only when the property he contributes to the corporation has debt attached to it that the corporation assumes

3. In a section 351 transaction, if a shareholder contributes appreciated property (subject to a debt) to a corporation in which he receives a controlling interest, the debt will be treated as “recognized gain” to the shareholder:

A. All the time

B. Some of the time

C. None of the time

D. Only when the debt that the corporation takes the property subject to is paid off by the corporation

4. In a section 351 transaction, if a shareholder contributes appreciated property subject to a business debt in excess of the shareholder’s basis in the property, to a corporation in which he receives a controlling interest, (assume he receives nothing from the corporation besides the stock) the amount of the shareholder’s “recognized gain” will be:

A. All the debt

B. some of the debt when the property is sold by the corporation

C. none of the debt

D. only the debt in excess of the basis when the property is contributed to the corporation

5. In a section 351 transaction in order for the transferors to constitute the “control group”:

A. They can be contractually obligated before the section 351 exchange to retransfer all their shares to a third party

B. They cannot be contractually obligated before the section 351 exchange to retransfer any of their shares to a third party

C. They can be contractually obligated before the exchange to retransfer their shares so long as after the retransfer they still own at least 80% of the corporate stock

D. They can only be contractually obligated to transfer any part of their shares after the section 351 exchange is completed

6. In section 351 transaction where the amount of the “boot” is the amount of the shareholder’s “recognized gain” his basis in the corporate stock he received will be:

A. Equal to the basis of the property transferred

B. Equal to the basis of the property transferred plus the recognized gain

C. Equal to the basis of the property less the FMV of boot received

D. Equal to the FMV of the property transferred plus the recognized gain less the FMV of the boot received

7. In a section 351 transaction where the shareholder transfers property (basis of $10) subject to a business debt (debt of $3) to a corporation in which he receives a controlling interest, his basis in the corporate stock he received will be:

A. Equal to the basis of the property transferred less the amount of the debt e

B. Equal to the basis of the property transferred less the debt the corporation takes the property subject to only if the debt falls under section 357(a)

C. Equal to the basis of the property transferred less the debt the corporation takes the property subject to only if the debt falls under section 357(b)

D. Equal to the basis of the property transferred less the debt the corporation takes the property subject to only if the debt falls under section 357(c)