Roger Transfers Assets from His Sole Proprietorship to His 100%-Owned

question 39

Multiple Choice

Roger transfers assets from his sole proprietorship to his 100%-owned Motor Corporation. Immediately after the incorporation, Motor Corporation transfers all of its assets to Blue Corporation for 10% of Blue's stock. Motor Corporation is liquidated. Which of the following statements is correct?

• A)The asset transfer by Motor Corporation meets the statutory Type C reorganization requirements.
• B)The IRS may collapse the two transactions into a single transaction, resulting in denial of tax-free reorganization treatment.
• C)The IRS may apply the step transaction doctrine.
• D)All of the above statements are correct.

Grasp the importance of ethical considerations in decision-making.

Comprehend the concept and use of ‘rules of thumb’ or heuristics for simplifying decision-making.

Understand the significance of consulting with others in the decision-making process.

Awareness of the potential for escalating commitment in decision-making.

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Definitions:

Usage of Trade

Established customs and practices commonly observed and accepted in a particular industry or trade.

UCC

The Uniform Commercial Code, which is a comprehensive set of laws governing sales and commercial transactions in the United States, intended to harmonize the law of sales and other commercial transactions across the country.

Suretyship Provision

A contractual arrangement where a third party (surety) agrees to take responsibility for the debtor's obligations if the debtor fails to fulfill them.

Suretyship Provision

A contractual agreement in which a party assumes responsibility for the debt obligation of a borrower if that borrower defaults.