Sarah and Tony (Mother and Son) Form Dove Corporation with the Following

question 61

Multiple Choice

Sarah and Tony (mother and son) form Dove Corporation with the following investments: cash by Sarah of $65,000? land by Tony (basis of $25,000 and fair market value of $35,000) . Dove Corporation issues 400 shares of stock, 200 each to Sarah and Tony. Thus, each receives stock in Dove worth $50,000.

• A) Section 351 cannot apply since Sarah should have received 260 shares instead of only 200.
• B) Section 351 may apply because stock need not be issued to Sarah and Tony in proportion to the value of the property transferred.
• C) Tony's basis in the stock of Dove Corporation is $50,000.
• D) As a result of the transfer, Tony recognizes a gain of $10,000.
• E) None of the above.

---

Definitions:

Criticisms

Evaluations or judgments expressed about something, pointing out its faults or shortcomings often with the intention of promoting improvement.

Continuity Theory

A psychological theory suggesting that individuals tend to maintain the same activities, behaviors, personalities, and relationships as they age.

Connected

Being joined or linked in some manner, either physically, emotionally, or digitally, implying a state of unity or association.

Past

The past refers to the period of time that has already occurred, in contrast to the present and the future.