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:

Unionized Business

A business where its workers are members of a union, which represents their interests in negotiations with management over wages, benefits, and working conditions.

NLRB

The National Labor Relations Board, a US federal agency responsible for enforcing US labor law in relation to collective bargaining and unfair labor practices.

Religious Schools

Educational institutions that are based on the teachings of a specific religion and often offer a curriculum that incorporates religious studies.

Unfair Labor Practice Charges

Allegations made by employees or labor unions against employers, accusing them of violating labor laws and workers' rights.