9.

A. Ted is attempting to meet the control requirement of the section 351. In order to qualify as non-taxable
exchange under section 351, Peggy must join Ted in the transaction. If the requirements are not met
$80000 on the transfer will be recognized as gain to Ted

B. The regulation provides that stock issued for property whose value is relatively small compared to the
value of stock already owned will not be treated as issued in return for property

11.

a) Liabilities not effects of liabilities on recognized gain and on basis. that's way it will not considered boot for
determining gain. Also note that liabilities have no effect on the determination of adjusted basis of the property to
the corporation.
b) If the transferee’s aggregate the adjusted basis property which is transferred in such transaction will exceed fair
market value of such property immediately after such transaction.
c) Here you get only stock in exchange of property, not stock along with property. The Corporation basis in the
property it receives in exchange against stock is the same basis you had in the property when transferred.
d) stock you receive is the same as the adjusted basis in the property you transfer

20

Statement Showing amount of gain recognized by G

Particular amount
Amount realized 18000
Less: property transferred 12000
Gain realized 6000
Gain recognized 6000

Therefore, G’s recognized and realized gain is $6,000 and stock basis is $18,000

22.

Particulars Amount
Liability on the transferred real estate 300,000
Less: adjusted real basis value 260,000
Gain recognized 40,000

Therefore, the gain on transfer is $40,000

28.

a. No gain on exchanges would be recognized by any party if the three exchanges are part of a pre-arranged plan

b. The gain that C will recognize on exchange is calculated below:

Recognized gain = Value of property – Basis of property

= $350,000 - $90,000

= $260,000

c. The parties could structure the transaction by using 351 if the property that Clyde contributes has a basis of
$490,000 (instead of $90,000). The realized gains would not be recognized under this section. It would be a benefit
for all parties. Also, the loss of $140,000 ($490,000 (FMV) - $350,000 basis on C’s exchange could be realized