Barry, Dan, and Edith Together Form a New Corporation; Barry

question 120

Multiple Choice

Barry, Dan, and Edith together form a new corporation; Barry and Dan each contribute property in exchange for stock. Within two weeks after the formation, the corporation issues additional stock to Edith in exchange for property. Barry and Dan each hold 10,000 shares and Edith will receive 9,000 shares. Which transactions will qualify for nonrecognition?

• A)Only the first transaction will qualify for nonrecognition.
• B)Only the second transaction will qualify for nonrecognition.
• C)Because of the step transaction doctrine, neither transaction will qualify.
• D)Both transactions will qualify under Sec. 351 if they are part of the same plan of incorporation.

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General Revenues

Funds collected by governments from various sources used to finance general public services, without specific limitations on their use.

Old Age and Survivors Insurance

Old Age and Survivors Insurance is a federal program in the United States that provides retirement benefits and survivor benefits to eligible beneficiaries.

Disability Insurance

A type of insurance that offers income support to individuals who are unable to work due to a disability.

In-Kind Transfer Program

A form of assistance where goods and services are provided to those in need, rather than cash.