18-1,2,3,6,27,28,31,35 Tim Lee

1. Both codes provide for nonrecognition of gain or loss for certain transfers which otherwise

would be taxable. Section 1031 and 351 are both tax deferrals.

2. A gain is recognized if the transferor receives boot in the exchange, character is ordinary. A

loss is never recognized.

3. Cash, fixed assets, unrealized receivables of a cash basis taxpayer, and secret processes/for-

mulas.

6. The control requirement that the person transferring property to the corporation must own at

least 80% of the stock, effective immediately after the transfer.

A. The control requirement can be lost as to the other shareholders.

B. The shareholder is treated as a member of the transferring group.

C. The shares don’t count in determining control if the disposition of stock existed before the

exchange

D. The control requirement can be lost, the longer it will be, the less likely you will be eligible

for 351.

27.

A. Gain of 50,000

B. 290,000

C. 240,000

D. 0

E. 600,000

F. 200,000

G. There would be no change

H. The gain for Gail would be 410,000

18-1,2,3,6,27,28,31,35 Tim Lee

28.

A. No gain

B. Gain of 260,000

C. No gain/loss recognized

31.

A. Ann doesn’t recognize a gain, while Bob recognizes a gain of 15,000

B. Ann has a basis of 150,000 for the stock, while Bob has the basis of 45,000. (30,000 for the

shares in property and 15,000 for legal services)

C. A total basis of 180,000 of property from Ann and Bob, while 15,000 is capitalized as orga-

nizational costs.

35.

A. Gain of 20,000

B. 0

C. 290,000

D. Leasing the equipment, inventory, and shelving