Corporate Formation, Reorganization, and Liquidation

SOLUTIONS MANUAL

Discussion Questions:

1. [LO 1Discuss the difference between gain realization and gain recognition in a property transaction.

2. [LO 1] What information must a taxpayer gather to determine the amount realized in a property transaction?

3. [LO 1] Distinguish between exclusion and deferral as it relates to a property transaction.

4. [LO 1] Discuss how a taxpayer's tax basis in property received in a property transaction will be affected based on whether a property transaction results in gain exclusions or gain deferral.

5. [LO 1] What information must a taxpayer gather to determine the tax-adjusted basis of property exchanged in a property transaction?

6. [LO 2] Why does Congress allow tax deferral on the formation of a corporation?

7. [LO 2] List the key statutory requirements that must be met before a corporate formation is tax-deferred under §351.

8. [LO 2] What is the definition of control for purposes of §351? Why does Congress require the shareholders to control a corporation to receive tax deferral?

9. [LO 2] What is a substituted basis as it relates to stock received in exchange for property in a §351 transaction? What is the purpose of attaching a substituted basis to stock received in a §351 transaction?

10. [LO 2] True or False? The receipt of boot by the shareholder in a §351 transaction causes the transaction to be fully taxable. Explain.