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:

Women

Female human beings; often discussed in numerous contexts including social, biological, cultural, and political.

Middle-Aged

Refers to the period in human life roughly between the ages of 40 and 65, often characterized by stability in relationships, career, and personal life.

Low Tar Cigarettes

Cigarettes that are designed to produce less tar and nicotine when smoked, in an effort to be a "healthier" alternative to regular cigarettes.

Nicotine

A stimulating and addictive substance found in tobacco that affects the nervous system and is a major component in cigarettes.