In 2005,Donna transferred assets (basis of $300,000 and fair market value of $250,000)to Egret Corporation in return for 200 shares of § 1244 stock.Due to § 351,the transfer was nontaxable;therefore,Donna's basis in the Egret stock is $300,000.In 2006,Donna sells 100 of these shares to Walter (a family friend)for $100,000.In 2012,Egret Corporation files for bankruptcy,and its stock becomes worthless.
Definitions:
Arraignment
An arraignment is a court proceeding where the defendant is formally charged and asked to respond to the charges by entering a plea.
Plea
A formal statement made by a defendant in court regarding their guilt or innocence concerning the charges against them.
Charges
Fees or prices asked for goods and services, or sums levied as penalties for breaking the law or conditions of a contract.
Recidivism
The tendency of a convicted criminal to reoffend.
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