Stu Walker Has Owned All 200 Shares of Lance Corporation's

question 96

Essay

Stu Walker has owned all 200 shares of Lance Corporation's stock for the past six years. This year, Megan Jones contributes property with a $100,000 basis and a $160,000 FMV for 160 newly issued Lance shares. At the same time, Stu contributes $30,000 in cash for 30 newly issued Lance shares. What tax issues should Megan and Stu consider with respect to the stock acquisitions?

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Definitions:

Reinforcing

A process in operant conditioning that increases the likelihood of a behavior by providing a consequence that is desirable.

Shaping

A method of teaching new behaviors by rewarding closer and closer approximations to the desired behavior.

Acquiring

The process of obtaining or gaining possession of something.

Cognitive-Behavioral Therapy

A psychotherapeutic approach that aims to solve problems concerning dysfunctional emotions, behaviors, and cognitions through a goal-oriented, systematic process.