Phil and Nick Form Philnick Corporation

question 75

Essay

Phil and Nick form Philnick Corporation. Phil exchanges cash and other property for 900 shares (90% of the outstanding shares)of Philnick stock. Nick performs accounting services in exchange for 100 shares of Philnick stock worth $10,000. What are the tax consequences from forming the Philnick Corporation to Phil and Nick?

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Definitions:

Personal Time

Time allocated for individual pursuits, rest, or leisure that is not dedicated to work-related activities.

Conflict

A situation or process resulting from the perceived or actual opposition of needs, values, and interests between people.

Individual

A single human being distinct from a group, class, or family.

Manifest Conflict

Open and observable conflicts or disagreements between individuals or groups within an organization.