301. CHAPTER 4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Quest Section 351 (which permits transfers to controlled corporations to be tax deferred) can be justified under the wherewithal to pay concept. a. True b. False 302. CHAPTER 4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que 2 Similar to like-kind exchanges the receipt of “boot” under § 351 can cause loss to be recognized. a. True b. False 303. CHAPTER 4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que 3 Tina incorporates her sole proprietorship with assets having a fair market value of $100 000 and an adjusted basis of $110 000. Even though § 351 applies Tina may recognize her realized loss of $10 000. a. True b. False 304. CHAPTER 4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que 4 In a § 351 transfer a shareholder receives boot of $10 000 but ends up with a realized loss of $3 000. Only $7 000 of the boot will be taxed to the shareholder. a. True b. False 305. CHAPTER 4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que 5 In a § 351 transfer the receipt of boot is not taxed if the shareholder has a realized loss. a. True b. False 306. CHAPTER 4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que 6 In a § 351 transfer gain will be recognized to the extent of the lesser of realized gain or the boot received. a. True b. False 307. CHAPTER 4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que 7 Allen transfers marketable securities with an adjusted basis of $120 000 fair market value of $300 000 for 85% of the stock of Heron Corporation. In addition he receives cash of $40 000. Allen recognizes a capital gain of $40 000 on the transfer. a. True b. False 308. CHAPTER 4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que 8 The definition of property for purposes of § 351 includes unrealized receivables transferred by a cash basis taxpayer. a. True b. False 309. CHAPTER 4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que 9 The transfer of an installment obligation in a transaction qualifying under § 351 is a disposition of the obligation that causes gain to be recognized by the transferor. a. True b. False 310. CHAPTER 4—CORPORATIONS: ORGANIZATION AND CAPITAL STRUCTURE Que10 A secret process and patentable invention both constitute “property” for purposes of § 351. a. True b. False
