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Maria has been operating a business as a sole proprietorship for several years. She needs additional capital and wants to incorporate her business. The assets of her business (building, land, inventory, and so on)have a $400,000 adjusted basis and a $1.5 million FMV. Maria is willing to exchange the assets for 1,500 shares of Metro Corporation stock, each having a $1,000 FMV. Bill and John are each willing to invest $500,000 in Maria's business and will each receive 500 shares of stock. Why is Sec. 351 important to Maria? Does it matter to Bill and John?
Compounded Annually
The process of calculating interest on both the initial principal and the accumulated interest from previous periods, applied once per year.
Interest Rate
The rate at which interest is applied to a borrowed sum, usually shown as an annual percentage of the remaining loan amount.
Perimeter
The perimeter of a shape is the total length of its boundary, measured along the outer sides.
Rectangular Playing Field
A flat area of land designated for sports or games, with a length typically greater than its width, bounded by straight edges at right angles.
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