Homework Answers
Issuance of stock in exchange for property is a non taxable transaction under Section 351 only if all the contributors of cash + property have 80% or more control.
If there is no control by shareholder group contributing cash and property, shareholder reports the transaction as a sale of property at Fair market value as of the date of contribution and recognizes all the gain or loss.
Sec. 351 does not apply to Abigail's exchange.
Realized gain = Fair market value - Basis = 100,000 - 15,000 = 85,000
Recognized gain = Realized gain = 85,000
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