Dan Knight and Patricia Chen form Crane Corporation. Dan transfers land (worth $200,000, basis of $60,000) for

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Dan Knight and Patricia Chen form Crane Corporation. Dan transfers land (worth $200,000, basis of $60,000) for 50% of the stock in Crane. Patricia transfers machinery (worth $150,000, adjusted basis of $30,000) and provides services worth $50,000 for 50% of the stock.
a. Will the transfers qualify under § 351? Explain.
b. What are the tax consequences to Dan and Patricia?
c. What is Crane Corporation’s basis in the land and the machinery?

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South-Western Federal Taxation 2022 Essentials Of Taxation Individuals And Business Entities

ISBN: 9780357519431

25th Edition

Authors: Annette Nellen, Andrew D. Cuccia, Mark Persellin, James C. Young, David M. Maloney

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Question Posted: Feb 24, 2022 07:14 AM

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Dan Knight and Patricia Chen form Crane Corporation. Dan transfers land (worth $200,000, basis of $60,000) for

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a The transfers will qualify under 351 because they are made in exchange for stock in a corporation ...View the full answer

South-Western Federal Taxation 2022 Essentials Of Taxation Individuals And Business Entities

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