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:

Mediocre

Of average to below-average quality; not outstanding or exceptionally good.

Embrace-or-demolish

A strategy or mindset in dealing with challenges or innovations by either fully adopting them (embrace) or completely removing them (demolish).

Terminating People

The process of ending an individual's employment or association with an organization, often due to performance issues or organizational changes.

Major Issues

Refers to the most significant problems or challenges that an individual, group, or organization faces.