Multiple answers given to exact question: Which of the following is NOT taken in
ID: 2332487 • Letter: M
Question
Multiple answers given to exact question: Which of the following is NOT taken into account when determining if a gain or loss should be recognized on the transfer of property to a corporation in exchange for a controlling interest in stock of the corporation? A. Fair market value of property transferred B. Ownership of at least 80% of the total combined voting power of all stock entitled to vote C. Ownership of at least 80% of the total number of shares of all other classes of stock D. Receipt of money in addition to stock A, B, and D are shown as answers for this exact question. What is the correct answer??
Explanation / Answer
Answer Fair value of property transfer.
When a person wants to take controlling interest in a corporation, then he requires to pay purchase consideration for it. For acquiring controlling interest he transfers property in form of money or other assets. And if after the transfer, immediately he gets control over the corporation, then the transfer of assets is usually not taxable. This provision applies both to individual and to groups who transfer assets to a corporation. It also applies whether the company is being formed or is already in operation.
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