MGMT 127B Lecture Notes - Lecture 3: Preferred Stock, Debt Relief
Document Summary
Transfers into a corporation: non reciprocal (just giving something to the company, nothing in return) Basis in present shares: increased by basis of the property contributed. Basis in received property: carried over: reciprocal (two direction transaction): shareholder puts in item, gets out stock. General rule: sale or exchange (generally assume that this means it is taxable now) Gain: yes (pay tax on the fmv - basis) Loss: yes, unless section 267 says it is impossible. Section 267 says that you cannot take a loss on a sale to a related party. Basis of received stock: fmv of property relinquished. I(cid:374)co(cid:373)e: (cid:374)o (cid:894)you do(cid:374)"t (cid:373)ake (cid:373)o(cid:374)ey whe(cid:374) you purchase so(cid:373)ethi(cid:374)g(cid:895) Basis of received property: cost (fmv of stock or securities relinquished) Section 351 (no tax now, double tax later- most opt for this): But yes if there is boot received, debt relief improper, or if debt relief is bigger than basis.
