1.
Chone
has an accrual-method, calendar-year sole proprietorship. On January 1, 20X9, he creates accrual- method, calendar-year Corporation and
transfers to Corporation, in exchange for all of Corporation’s stock (1 class),
a single asset, as follows:
Asset (depreciable
personality): Original cost $100,000
Adjusted
basis
$30,000
Value $250,000
Holding
period 7 years
a. Determine the tax consequences to:
i. Chone
ii. Corporation
2.
Assume
the same facts as in Question 1, with the following changes:
Vlade
joined Chone in the January 1, 20X9 capitalization of Corporation, with Vlade
contributing $200,000. Chone got half of
the stock and $50,000; Vlade got the other half of the stock.
a.
What
is the value of Corporation immediately after the § 351 event (you need this to
determine the value of the stock received by the shareholders in the § 351
event)?
b.
Determine
the tax consequences to:
i. Vlade
ii. Chone
iii. Corporation
3.
Assume
the same facts as in Question 2, with the following changes:
Chone’s
Asset is worth $400,000 and is subject to a nonrecourse liability of $200,000
Chone
gets no cash
a.
What
is the value of Corporation immediately after the § 351 event?
b.
Determine
the tax consequences to:
i. Chone
ii. Corporation
