Matt and Sheila Form Krupp Corporation

question 15

Multiple Choice

Matt and Sheila form Krupp Corporation. Matt contributes property with an FMV of $55,000 and a basis of $35,000. Sheila contributes property with an FMV of $75,000 and a basis of $40,000. Matt sells his stock to Paul shortly after the exchange. The transaction will

• A)not qualify under Sec. 351.
• B)qualify under Sec. 351 if Matt can show that the sale to Paul was not part of a prearranged plan.
• C)qualify with respect to Sheila under Sec. 351 whether Matt qualifies or not.
• D)qualify under Sec. 351 only if an advance ruling has been obtained.

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Definitions:

F-test

The F-test is a type of statistical test that determines if there are significant differences between the variances of two or more samples.

Coefficient of Determination

A statistical measure, often denoted as R^2, that represents the proportion of the variance in the dependent variable that is predictable from the independent variable(s).

Independent Variables

Variables in an experiment or model that are manipulated or changed to observe their effect on dependent variables.

Total Variation

The overall measure of the spread or dispersion of a set of data points.