Question 1

Which of the following statements best describes the continuity of interest principle as it applies to a tax-deferred acquisition?

Accepted Answer

A)  Continuity of interest requires each shareholder to receive at least 40 percent of the consideration received in equity of the acquirer. 
B)  Continuity of interest requires shareholders in the aggregate to receive at least 40 percent of the consideration received in equity of the acquirer. 
C)  Continuity of interest requires each shareholder to receive at least 80 percent of the consideration received in equity of the acquirer. 
D)  Continuity of interest requires shareholders in the aggregate to receive at least 80 percent of the consideration received in equity of the acquirer. 
A)  Continuity of interest requires each shareholder to receive at least 40 percent of the consideration received in equity of the acquirer. 
B)  Continuity of interest requires shareholders in the aggregate to receive at least 40 percent of the consideration received in equity of the acquirer. 
C)  Continuity of interest requires each shareholder to receive at least 80 percent of the consideration received in equity of the acquirer. 
D)  Continuity of interest requires shareholders in the aggregate to receive at least 80 percent of the consideration received in equity of the acquirer. B

Question 2

Which of the following statements best describes the impact of receiving boot in a §351 transaction?

Accepted Answer

A)  Boot received has no impact on the recognition of gain or loss realized in a §351 transaction. 
B)  Boot received causes gain realized to be recognized, but not loss realized. 
C)  Boot received causes loss realized to be recognized, but not gain realized. 
D)  Boot received causes gain or loss realized to be recognized. 
A)  Boot received has no impact on the recognition of gain or loss realized in a §351 transaction. 
B)  Boot received causes gain realized to be recognized, but not loss realized. 
C)  Boot received causes loss realized to be recognized, but not gain realized. 
D)  Boot received causes gain or loss realized to be recognized. B

Question 3

The definition of property as it relates to a §351 transaction includes money.

Accepted Answer

A) True 
 B)False  True

Question 4

Sue transferred 100 percent of her stock in Oakland Company to Applegate Corporation in a Type A merger. In exchange she received stock in Applegate with a fair market value of $800,000 plus $400,000 in cash. Sue's tax basis in the Oakland stock was $1,500,000. What amount of gain or loss does Sue recognize in the exchange and what is her basis in the Applegate stock she receives?

Accepted Answer

No loss recognized. Her basis in the App

Question 5

To meet the control test under §351, taxpayers transferring property to a corporation must in aggregate own 80 percent or more of the corporation's voting stock and 80 percent of each class of nonvoting stock after the transfer.

Accepted Answer

A) True 
 B)False

Question 6

Continuity of interest as it relates to a tax reorganization focuses on the aggregate equity received by the shareholders of the target corporation in the transaction.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements best describes the tax consequences of a §338 election?

Accepted Answer

A)  Gain or loss is recognized by the acquired corporation on the deemed sale of its assets, and the buyer gets a stepped-up basis in the assets acquired. 
B)  Gain or loss is recognized by the acquired corporation on the deemed sale of its assets, and the buyer gets a carryover basis in the assets acquired. 
C)  Gain or loss is not recognized by the acquired corporation on the deemed sale of its assets, and the buyer gets a stepped-up basis in the assets acquired. 
D)  Gain or loss is not recognized by the acquired corporation on the deemed sale of its assets, and the buyer gets a carryover basis in the assets acquired. 
A)  Gain or loss is recognized by the acquired corporation on the deemed sale of its assets, and the buyer gets a stepped-up basis in the assets acquired. 
B)  Gain or loss is recognized by the acquired corporation on the deemed sale of its assets, and the buyer gets a carryover basis in the assets acquired. 
C)  Gain or loss is not recognized by the acquired corporation on the deemed sale of its assets, and the buyer gets a stepped-up basis in the assets acquired. 
D)  Gain or loss is not recognized by the acquired corporation on the deemed sale of its assets, and the buyer gets a carryover basis in the assets acquired.

Question 8

A taxpayer always will have a tax basis in boot received in a §351 transaction equal to its fair market value.

Accepted Answer

A) True 
 B)False

Question 9

Antoine transfers property with a tax basis of $500 and a fair market value of $600 to a corporation in exchange for stock with a fair market value of $550 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $50 on the property transferred. What is Antoine's tax basis in the stock received in the exchange?

Accepted Answer

A)  $600 
B)  $550 
C)  $500 
D)  $450 
A)  $600 
B)  $550 
C)  $500 
D)  $450

Question 10

A reverse triangular reorganization requires that the target shareholders receive voting stock of the acquiring corporation.

Accepted Answer

A) True 
 B)False

Question 11

Sami transferred property with a fair market value of $600 and a tax basis of $300 to a corporation in exchange for stock with a fair market value of $600. In addition, Sami received stock with a fair market value of $50 in exchange for services she provided to the corporation in the incorporation process. Which of the following statements best describes the tax result to Sami because of the exchanges?

Accepted Answer

A)  Sami will recognize $50 of compensation income, but she can count the shares of stock she receives in exchange for services in determining if the control test is met under §351. 
B)  Sami will recognize $50 of compensation income, but she cannot count the shares of stock she receives in exchange for services in determining if the control test is met under §351. 
C)  Sami will not recognize $50 of compensation income, but she can count the shares of stock she receives in exchange for services in determining if the control test is met under §351. 
D)  Sami will not recognize $50 of compensation income, and she cannot count the shares of stock she receives in exchange for services in determining if the control test is met under §351. 
A)  Sami will recognize $50 of compensation income, but she can count the shares of stock she receives in exchange for services in determining if the control test is met under §351. 
B)  Sami will recognize $50 of compensation income, but she cannot count the shares of stock she receives in exchange for services in determining if the control test is met under §351. 
C)  Sami will not recognize $50 of compensation income, but she can count the shares of stock she receives in exchange for services in determining if the control test is met under §351. 
D)  Sami will not recognize $50 of compensation income, and she cannot count the shares of stock she receives in exchange for services in determining if the control test is met under §351.

Question 12

April transferred 100 percent of her stock in June Company to March Corporation in a taxable merger. In exchange she received stock in March with a fair market value of $400,000 plus $1,200,000 in cash. April's tax basis in the June stock was $2,000,000. What amount of loss does April recognize in the exchange and what is her basis in the March stock she receives?

Accepted Answer

$400,000 capital loss. Her basis in the

Question 13

Casey transfers property with a tax basis of $2,500 and a fair market value of $6,900 to a corporation in exchange for stock with a fair market value of $5,300 and $700 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $900 on the property transferred. Casey also incurred selling expenses of $316. What is the amount realized by Casey in the exchange?

Accepted Answer

A)  $6,900 
B)  $6,584 
C)  $6,484 
D)  $5,784 
A)  $6,900 
B)  $6,584 
C)  $6,484 
D)  $5,784

Question 14

Phillip incorporated his sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values and tax-adjusted bases.
   The fair market value of the corporation's stock received in the exchange was $400,000. The transaction met the requirements to be tax-deferred under §351.
a. What amount of net gain or loss does Phillip realize on the transfer of the property to his corporation?
b. What amount of gain or loss does Phillip recognize on the transfer of the property to his corporation?
c. What is the corporation's adjusted basis in each of the assets received in the exchange?

Accepted Answer

a.Net $50,000 loss
 @#IMG-DLM& b. Phillip does not

Question 15

Rachelle transfers property with a tax basis of $980 and a fair market value of $1,280 to a corporation in exchange for stock with a fair market value of $720 and $88 incash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $472 on the property transferred. What is the corporation's tax basis in the property received in the exchange?

Accepted Answer

A)  $1,280 
B)  $1,068 
C)  $980 
D)  $720 
A)  $1,280 
B)  $1,068 
C)  $980 
D)  $720

Question 16

Rachelle transfers property with a tax basis of $800 and a fair market value of $900 to a corporation in exchange for stock with a fair market value of $750 and $50 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $100 on the property transferred. What is the corporation's tax basis in the property received in the exchange?

Accepted Answer

A)  $900 
B)  $850 
C)  $800 
D)  $750 
A)  $900 
B)  $850 
C)  $800 
D)  $750

Question 17

Simone transferred 100 percent of her stock in Purple Company to Plum Corporation in a Type A merger. In exchange, she received stock in Plum with a fair market value of $500,000 plus $500,000 in cash. Simone's tax basis in the Purple stock was $200,000. What amount of gain does Simone recognize in the exchange and what is her basis in the Plum stock she receives?

Accepted Answer

A)  $800,000 gain recognized and a basis in Plum stock of $1,000,000 
B)  $800,000 gain recognized and a basis in Plum stock of $500,000 
C)  $500,000 gain recognized and a basis in Plum stock of $500,000 
D)  $500,000 gain recognized and a basis in Plum stock of $200,000 
A)  $800,000 gain recognized and a basis in Plum stock of $1,000,000 
B)  $800,000 gain recognized and a basis in Plum stock of $500,000 
C)  $500,000 gain recognized and a basis in Plum stock of $500,000 
D)  $500,000 gain recognized and a basis in Plum stock of $200,000

Question 18

Which of the following statements best describes the tax law approach to recognizing gain or loss realized in an exchange?

Accepted Answer

A)  Gain or loss realized is not recognized unless specifically stated otherwise in the Internal Revenue Code. 
B)  Gain or loss realized is recognized unless specifically stated otherwise in the Internal Revenue Code. 
C)  Gain realized is recognized unless specifically stated otherwise in the Internal Revenue Code, but loss realized is not recognized unless specifically stated otherwise in the Internal Revenue Code. 
D)  Loss realized is recognized unless specifically stated otherwise in the Internal Revenue Code, but gain realized is not recognized unless specifically stated otherwise in the Internal Revenue Code. 
A)  Gain or loss realized is not recognized unless specifically stated otherwise in the Internal Revenue Code. 
B)  Gain or loss realized is recognized unless specifically stated otherwise in the Internal Revenue Code. 
C)  Gain realized is recognized unless specifically stated otherwise in the Internal Revenue Code, but loss realized is not recognized unless specifically stated otherwise in the Internal Revenue Code. 
D)  Loss realized is recognized unless specifically stated otherwise in the Internal Revenue Code, but gain realized is not recognized unless specifically stated otherwise in the Internal Revenue Code.

Question 19

Maria defers $100 of gain realized in a §351 transaction. The stock she receives in the exchange has a fair market value of $500. Maria's tax basis in the stock will be $400.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements best describes the tax results to a shareholder in a §351 transaction when liabilities on property transferred to the corporation are assumed by the corporation?

Accepted Answer

A)  Liabilities assumed by a corporation on a §351 transfer are always treated as boot. 
B)  Liabilities assumed by a corporation on a §351 transfer are never treated as boot. 
C)  Liabilities assumed by a corporation on a §351 transfer are treated as boot if the total liabilities assumed exceed the total basis of the assets transferred. 
D)  Liabilities assumed by a corporation on a §351 transfer are treated as boot if there is no business purpose for the assumption of the liabilities by the corporation. 
A)  Liabilities assumed by a corporation on a §351 transfer are always treated as boot. 
B)  Liabilities assumed by a corporation on a §351 transfer are never treated as boot. 
C)  Liabilities assumed by a corporation on a §351 transfer are treated as boot if the total liabilities assumed exceed the total basis of the assets transferred. 
D)  Liabilities assumed by a corporation on a §351 transfer are treated as boot if there is no business purpose for the assumption of the liabilities by the corporation.

Which of the following statements best describes the continuity of interest principle as it applies to a tax-deferred acquisition?

Which of the following statements best describes the impact of receiving boot in a §351 transaction?

The definition of property as it relates to a §351 transaction includes money.

To meet the control test under §351, taxpayers transferring property to a corporation must in aggregate own 80 percent or more of the corporation's voting stock and 80 percent of each class of nonvoting stock after the transfer.

Continuity of interest as it relates to a tax reorganization focuses on the aggregate equity received by the shareholders of the target corporation in the transaction.

Which of the following statements best describes the tax consequences of a §338 election?

A taxpayer always will have a tax basis in boot received in a §351 transaction equal to its fair market value.

A reverse triangular reorganization requires that the target shareholders receive voting stock of the acquiring corporation.

Which of the following statements best describes the tax law approach to recognizing gain or loss realized in an exchange?

Maria defers $100 of gain realized in a §351 transaction. The stock she receives in the exchange has a fair market value of $500. Maria's tax basis in the stock will be $400.

Which of the following statements best describes the tax results to a shareholder in a §351 transaction when liabilities on property transferred to the corporation are assumed by the corporation?

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Business Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Non-Liquidating Distributions

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

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Exam 8: Corporate Formation, Reorganization, and Liquidation

Which of the following statements best describes the continuity of interest principle as it applies to a tax-deferred acquisition?

Which of the following statements best describes the impact of receiving boot in a §351 transaction?

The definition of property as it relates to a §351 transaction includes money.

To meet the control test under §351, taxpayers transferring property to a corporation must in aggregate own 80 percent or more of the corporation's voting stock and 80 percent of each class of nonvoting stock after the transfer.

Continuity of interest as it relates to a tax reorganization focuses on the aggregate equity received by the shareholders of the target corporation in the transaction.

Which of the following statements best describes the tax consequences of a §338 election?

A taxpayer always will have a tax basis in boot received in a §351 transaction equal to its fair market value.

A reverse triangular reorganization requires that the target shareholders receive voting stock of the acquiring corporation.

Which of the following statements best describes the tax law approach to recognizing gain or loss realized in an exchange?

Maria defers $100 of gain realized in a §351 transaction. The stock she receives in the exchange has a fair market value of $500. Maria's tax basis in the stock will be $400.

Which of the following statements best describes the tax results to a shareholder in a §351 transaction when liabilities on property transferred to the corporation are assumed by the corporation?

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Business Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Non-Liquidating Distributions

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters