美国税法2010 Organization and Capital Structure.pptVIP

Chapter 18 Corporations: Organization and Capital Structure Corporation Formation Transaction Formation Example Ron will incorporate his donut shop: Asset Fair Mkt Tax Basis Value . Cash $10,000 $ 10,000 Furniture Fixtures 20,000 60,000 Building 40,000 100,000 Total $70,000 $170,000 Without §351: gain of $100,000. With §351: no gain or loss. Ron’s economic status has not changed. Consequences of §351(slide 1 of 2) In general, no gain or loss to transferors: On transfer of property to corporation In exchange for stock IF immediately after transfer, transferors are in control of corporation Consequences of §351(slide 2 of 2) If boot (property other than stock) received by transferors Gain recognized up to lesser of: Boot received or Realized gain No loss is recognized Issues re: Formation(slide 1 of 7) Definition of property includes: Cash Secret processes and formulas Unrealized accounts receivable (for cash basis taxpayer) Installment obligations Code specifically excludes services from definition of property Issues re: Formation(slide 2 of 7) Stock transferred Includes common and most preferred stock Does not include nonqualified preferred stock which possesses many attributes of debt Does not include stock rights or stock warrants Does not include corporate debt or securities (e.g., corporate bonds) Treated as boot Issues re: Formation (slide 3 of 7) Transferors must be in control immediately after exchange to qualify for nontaxable treatment To have control, transferors must own: 80% of total combined voting power of all classes of stock entitled to vote, and 80% of total number of shares of all other classes of stock Issues re: Formation (slide 4 of 7) “Immediately after” the transfer Does not require simultaneous transfers if more than one transferor Rights of parties should be outlined before first transfer Transfers should occur as c