Question
ann, irene, and bob incorporate their respective businesses and form Dove Corporation. Ann exchanges her property (basis of $100,000 and fair market value of $400,000) for 200 shares in Dove corporation on March 1, 2005. Irene exhanges her property (basis of $140,000 and fair market value of $600,000) for 300 shares in Dove Corporation on April 11, 2005. Bob transfer his property (basis of $250,000 and fair market value of $1,000,000) for 500 shares in Dove Corporation on May 15, 2007. Bob's transfer is not part of a prearranged plan with Ann and Irene to incorporate their businesses. What gain if any will bob recognize on the transfer?
Answers
750,000
75,000 The exchange is taxable because Bob did not hold 80% control in Dove after the transfer.
750K
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