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.

---

Definitions:

Implementation Task Forces

Special groups or teams formed within an organization to execute and monitor the implementation of specific projects or strategic initiatives.

Compensation Level

The scale or amount of wages, salaries, and benefits that employees receive, which can vary based on position, experience, competence, and market factors.

Compensation Budget

The allocated amount of money that an organization plans to spend on employee salaries, wages, and other benefits over a specific period.

Forecast

The process of making predictions about future events, often based on analysis of data and trends.