Section 351 and Boot. X Corporation was formed several years ago by Q and R to...

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Section 351 and Boot. X Corporation was formed several years ago by Q and R to operate a custom T-shirt shop in Dayton. Each received 50 shares of stock. This year, Q and R decided to expand and bring in S, T, and U, who operated a similar shop in Toledo. To this end, the following investments were made by the new and existing shareholders. Transferor S T U Property Transferred Shirt inventory Land and building Embroidery equipment Cost Depreciation Cash $75,000 $ 9,000 Transferor's Basis $ 60,000 74,000 66,000 100,000 Fair Market Value $110,000 80,000 40,000 100,000 Received 100 shares, $10,000 cash 70 shares, $10,000 cash 30 shares, $10,000 cash R a. Does the transaction qualify for § 351 treatment? For the remaining questions, assume the transaction is eligible for § 351 treatment. b. Compute the gain or loss recognized by S, T, and U. c. Compute the bases of the stock received by S, T, and U. d. Compute the bases of the assets received by the corporation. 100 shares Section 351 and Boot. X Corporation was formed several years ago by Q and R to operate a custom T-shirt shop in Dayton. Each received 50 shares of stock. This year, Q and R decided to expand and bring in S, T, and U, who operated a similar shop in Toledo. To this end, the following investments were made by the new and existing shareholders. Transferor S T U Property Transferred Shirt inventory Land and building Embroidery equipment Cost Depreciation Cash $75,000 $ 9,000 Transferor's Basis $ 60,000 74,000 66,000 100,000 Fair Market Value $110,000 80,000 40,000 100,000 Received 100 shares, $10,000 cash 70 shares, $10,000 cash 30 shares, $10,000 cash R a. Does the transaction qualify for § 351 treatment? For the remaining questions, assume the transaction is eligible for § 351 treatment. b. Compute the gain or loss recognized by S, T, and U. c. Compute the bases of the stock received by S, T, and U. d. Compute the bases of the assets received by the corporation. 100 shares

Answer rating: 100% (QA)

a The transaction may qualify for 351 treatment if the following requirements are met The transferor... View the full answer