Ann and Bob form Robin Corporation. Ann transfers property worth $ 420,000 (basi

Question

Ann and Bob form Robin Corporation. Ann transfers property worth $ 420,000 (basis of $150,000) for 70 shares in Robin Corporation. Bob receives 30 shares for property worth worth $ 15,000 (basis of $ 3,000) and for legal services (worth $165,000) in organizing the corporation.

Where are the tax consequences to Ann, Bob, and Robin Corporation? check all that apply

1. Ann's transfer will not qualify under 351
2. Bob will qualify as a member of the control group.
3. Bob's transfer will qualify under 351.
4. The stock issued for property whose value is relatively small compared to the value of the services rendered will not be treated as issued in return for property.
5. Robin's basis in the property transferred by Ann and Bob will be $420,000 and $15,000, respectively.

Explanation / Answer

1) Ann's transfer will not qualify under 351 as he got more shares 2)Bob cannot qualify as member of control group. as he has ownership in this corporation 3)Bob transfer will qualify 4) true .The stock issued for property whose value is relatively small compared to the value of the services rendered will not be treated as issued in return for property. 5)true. Robin's basis in the property transferred by Ann and Bob will be $420,000 and $15,000, respectively.

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