Question: Questions: a. Does this transaction qualify as an IRC 351 transaction? Explain your answer. b. What are the tax consequences for Sara? c. What are

Questions: a. Does this transaction qualify as an IRC 351 transaction?

Questions: a. Does this transaction qualify as an IRC 351 transaction? Explain your answer.

b. What are the tax consequences for Sara? c. What are the tax consequences to the corporation?

Problem #2 Sara and Jose form a new corporation by transferring the following in exchange for stock: Description Equipment Land Sara Adj. Basis $ 50,000 250,000 Received 75 Shares FMV 75,000 255,000 $ Jose 25 Shares Management Services Equipment 75,000 10,000 2,000 Total $ 302,000 $ 415,000 Notes: (1) Sara also receives a $75,000 Note from the corporation. (2) Jose agrees to provide one year of management services. Problem #2 Sara and Jose form a new corporation by transferring the following in exchange for stock: Description Equipment Land Sara Adj. Basis $ 50,000 250,000 Received 75 Shares FMV 75,000 255,000 $ Jose 25 Shares Management Services Equipment 75,000 10,000 2,000 Total $ 302,000 $ 415,000 Notes: (1) Sara also receives a $75,000 Note from the corporation. (2) Jose agrees to provide one year of management services

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