[vukz]

Quick question with regards to property contributed that falls under Sec 351….to qualify under Sec 351 there needs to be 80% ownership, does this include 80% for a group as well?

In order to calculate the Tax Basis to each shareholder you take the Asset Basis + Any Recognized Gain + Any Cash Distributed – Any Cash Received? Are any assumptions of liabilities taken into account here? Also what would the basis to the corporation be in this case?

When property is distributed from a company the tax basis to the shareholder is the FMV and the dividend is the FMV less any liabilities assumed?

With Partnerships distributions simply adjust the basis in the partnership

Thanks in advance for any input on any of these areas….there are just so many different treatments I am starting to get them all interwind

FAR (75)
AUD (76)
BEC (75)
REG (72), (80)

[jackaroe]

Just went over this (NOT the partnership portion of your questions) yesterday – my gist from Wiley and Yeager.

Section 351

Shareholder will have gain if the selling price is more than (FMV-Basis).

As far as the 80% – From the Wiley Reg 2011 – Module 39 MC1.

A gets 450 shares and he donates property

B gets 350 shares and he donates cash

C gets 250 shares and he donates services

“C” has taxable income for services rendered.

So he is not in the control group.

When you consider the ‘control transfer' you only consider

A and B.

You add up A, B, and C and come out with 1050 total shares issued.

Add up the shares of A and B – 800 shares.

Divide 800/1050 is less than the 80% (76%).

Since they didn't get 80% – they didn't get ‘control'.

If it were above 80% there would be no taxable event.

Since it is below 80% there could be possible tax consequences.

In order to calculate the Tax Basis to each shareholder:

A's donated property had a FMV of 45,000 and Basis of 30,000.

Since it's not 351 (didn't reach 80%), A's recognized gain of 15,000 (FMV-Basis).

The corporation's basis of the property is 45,000.

When no control – FMV.

A's basis in the stock will be 45,000.

For B – who donated cash – there is no gain.

If control – “basis” of property and cash donated is the new basis.

For services rendered – Whatever is the taxable income is the beginning basis.

[Author]

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