[mczarnecka]

Hi guys! I’m trying to wrap my head around the Reg 3 C Corporation section, I’ve never posted but am so desperate I’m hoping someone can help. I can’t grasp any part of the explanations for when gains are recognized or what the shareholder’s basis is or a corporation’s basis in the property received, all of the rules seem really convoluted to me (it doesn’t help that I’ve never taken a tax class). I know the first rule, during organization, is that the basis of property of the corp is the NBV plus the shareholder gain or the debt assumed. But what is the shareholder gain?? And what if it’s not during organization? What if the shareholder doesn’t control 80% afterwards? What if cash is given back to the shareholder during any of these transactions? Has anyone created a clear outline of these scenarios? please please please help me :'(

[DukeOfPrunes]

In the example problems DLu posted above, the calculation for REALIZED GAIN is FMV of stock + BOOT – NBV. In the Becker problems I looked at, REALIZED GAIN = FMV of property contributed by shareholder – NBV. Is one of these formulas incorrect or does which one to use depend on the facts given in the problem? Thanks.

[Tncincy]

Try them both and see if the answer is the same, or which answer is correct according to the test bank.

It begins with a 75
Been here too long as a cheerleader....ready to pass

[dj]

If I am understanding @Dlu’s posts correctly the main difference between a controlling and
non-controlling shareholder who gives property and receives stock from a corporation in return:

Is that a controlling shareholder (80% of more control) recognized gain is the lessor or boot received or realized gain. (IRC 351)

Whereas for a non-controlling shareholder the recognized gain is the entire realized gain since the nonrecognition provisions do NOT apply?

If anyone is using Gleim for REG this problem is from Study Unit 11 SIM 8.

[Author]

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