Barry, Dan, and Edith Together Form a New Corporation; Barry

question 120

Multiple Choice

Barry, Dan, and Edith together form a new corporation; Barry and Dan each contribute property in exchange for stock. Within two weeks after the formation, the corporation issues additional stock to Edith in exchange for property. Barry and Dan each hold 10,000 shares and Edith will receive 9,000 shares. Which transactions will qualify for nonrecognition?

• A)Only the first transaction will qualify for nonrecognition.
• B)Only the second transaction will qualify for nonrecognition.
• C)Because of the step transaction doctrine, neither transaction will qualify.
• D)Both transactions will qualify under Sec. 351 if they are part of the same plan of incorporation.

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Definitions:

Chromosome 15

A specific chromosome in humans that carries genetic information, including genes associated with various disorders and physical traits.

Repressible Genes

Genes that can be turned off by the products of other genes in response to certain conditions.

TATA Box

A component of a eukaryotic promoter region; consists of a sequence of bases located about 30 base pairs upstream from the transcription initiation site.

RNA Polymerase

A crucial enzyme responsible for synthesizing RNA from a DNA template, playing a key role in the process of transcription.