Question 1. Kim, a real estate dealer, and others form Eagle Corporation un

1. Kim, a real estate dealer, and others form Eagle Corporation under § 351. Kim contributes inventory (land held for resale) in return for Eagle stock. The holding period for the stock includes the holding period of the inventory.

a. True

b. False

2. A shareholder transfers a capital asset to Red Corporation for its stock. If the transfer qualifies under § 351, Red’s holding period for the asset begins on the day of the exchange.

a. True

b. False

3. A shareholder’s holding period for stock received under § 351 can include the holding period of the property transferred to the corporation.

a. True

b. False

4. When depreciable property is transferred to a controlled corporation under § 351, any recapture potential disappears and does not carry over to the corporation.

a. True

b. False

5. In order to encourage the development of an industrial park, a county donates land to Ecru Corporation. The donation does not result in gross income to Ecru.

a. True

b. False

6. A city contributes $500,000 to a corporation as an inducement to locate in the city. Within the next 12 months, the corporation uses the money to purchase property. The corporation has income of $500,000 and must reduce its tax basis in the property by the same amount.

a. True

b. False

7. To ease a liquidity problem, all of the shareholders of Osprey Corporation contribute additional cash to its capital. Osprey has no tax consequences from the contribution.

a. True

b. False

8. A shareholder contributes land to his wholly owned corporation but receives no stock in return. The corporation has a zero basis in the land.

a. True

b. False

9. In structuring the capitalization of a corporation, the tax law is neutral for the investor as to debt versus equity financing.

a. True

b. False

10.To help avoid the thin capitalization problem, it is advisable to make the repayment of the debt contingent upon the corporation’s earnings.

a. True

b. False

11.Ira, a calendar year taxpayer, purchases as an investment stock in Redbird Corporation on November 1, 2013. On February 1, 2014, Redbird Corporation is declared bankrupt, and Ira’s stock becomes worthless. Presuming § 1244 (stock in a small business corporation) does not apply, Ira has a short-term capital loss for 2014.

a. True

b. False

12.Amy owns 20% of the stock of Wren Corporation, which she acquired several years ago at a cost of $10,000. Amy is Vice-President of Wren and earns a salary of $80,000 annually. Last year, Wren Corporation was experiencing financial problems, and Amy loaned the corporation $25,000. In the current year, Wren becomes bankrupt, and both her stock investment and the loan become worthless. Amy has a nonbusiness bad debt deduction this year of $25,000.

a. True

b. False

13.If a shareholder owns stock received as a gift from her mother, it cannot be § 1244 stock.

a. True

b. False

14.Mitchell and Powell form Green Corporation. Mitchell transfers property (basis of $105,000 and fair market value of $90,000) while Powell transfers land (basis of $8,000 and fair market value of $75,000) and $15,000 of cash. Each receives 50% of Green Corporation’s stock (total value of $180,000). As a result of these transfers:

a. Mitchell has a recognized loss of $15,000, and Powell has a recognized gain of $67,000.

b. Neither Mitchell nor Powell has any recognized gain or loss.

c. Mitchell has no recognized loss, but Powell has a recognized gain of $15,000.

d. Green Corporation will have a basis in the land of $23,000.

Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.