Don transfers the business assets of his sole proprietorship to C corporation in
ID: 2819726 • Letter: D
Question
Don transfers the business assets of his sole proprietorship to C corporation in a non taxable exchange on Sept. 20X1. The holding period for all of Don’s stock in C Corp. commenced on: Date of exchange 1st day of year in which exchange took place Holding period for the assets in sole partnership Last day of year in which exchange took place Don transfers the business assets of his sole proprietorship to C corporation in a non taxable exchange on Sept. 20X1. The holding period for all of Don’s stock in C Corp. commenced on: Date of exchange 1st day of year in which exchange took place Holding period for the assets in sole partnership Last day of year in which exchange took place Date of exchange 1st day of year in which exchange took place Holding period for the assets in sole partnership Last day of year in which exchange took placeExplanation / Answer
Hello Sir/Mam
THE CORRECT ANSWER IS OPTION A : DATE OF EXCHANGE
As per IRC 351, the exchange where a person transfers property to a corporation solely in exchange for its stock, is non-taxable if and only if he is in control of the corporation immediately after the exchange, i.e. he/she must hold more than 80% of total stock of the corporation.
Hence, to make the exchange non-taaxable, holding period of the Don's stock in C Corp will commence immediately on the exchange.
I hope this solves your doubt.
Feel free to comment if you still have any query.
Do give a thumbs up if you find this helpful.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.