Dan Transfers Property with an Adjusted Basis of $50,000 and an FMV

question 46

Essay

Dan transfers property with an adjusted basis of $50,000 and an FMV of $100,000 to a newly formed Sun Corporation in exchange for 500 shares of Sun stock, which is one-half of the outstanding Sun stock. His daughter, Sylvia, transfers property with an adjusted basis of $25,000 and an FMV of $50,000 for the other 500 shares at the same time. What are the tax consequences of the two transfers, assuming all the requirements of Sec. 351 are met?

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Definitions:

Product Advertisements

Advertisements that focus on selling a product or service and which take three forms: (1) pioneering (or informational), (2) competitive (or persuasive), and (3) reminder.

Nonpersonal Communication

Any form of message dissemination that does not involve direct personal contact, including mass media advertising, sales promotions, and public relations.

Identified Sponsor

In advertising, a sponsor whose name and identity is known and disclosed in the message to inform or persuade the audience.

Advertising

The action of calling public attention to products, services, needs, etc., through paid announcements by an identified sponsor.