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:

Coronary Artery

One of two arteries that arise from the base of the aorta and carry blood to the muscle of the heart.

Abdominal Aorta

The portion of the aorta that passes through the abdomen, supplying oxygenated blood to the abdominal and pelvic organs and the legs.

Common Iliac

Refers to the large artery that divides into the internal and external iliac arteries, supplying blood to the pelvic region and legs.

Inferior Mesenteric

Refers to the inferior mesenteric artery that supplies blood to the lower portions of the abdomen, including parts of the large intestine.