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Phil and Nick Form Philnick Corporation

question 75

Essay

Phil and Nick form Philnick Corporation. Phil exchanges cash and other property for 900 shares (90% of the outstanding shares)of Philnick stock. Nick performs accounting services in exchange for 100 shares of Philnick stock worth $10,000. What are the tax consequences from forming the Philnick Corporation to Phil and Nick?


Definitions:

Parallel Play

A developmental stage of play in which young children play adjacent to each other but do not directly interact.

Onlooker Play

Action in which children simply watch others at play but do not actually participate themselves.

Functional Play

Play activity that involves simple, repetitive movements with or without objects, common in young children and contributing to their physical development.

Associative Play

A stage of play where children engage in separate activities but interact by sharing materials and communicating with each other.

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