Aaron purchases a building for $500,000 which is going to be used by his wholly-owned corporation.Which of the following statements are correct?
A)If Aaron contributes the building to the corporation,there will be no recognition under § 351 and a carryover basis of $500,000.
B)If Aaron leases the building to the corporation,lease-rental payments of $30,000 per year to Aaron will result in a $30,000 deduction for the corporation.
C)If Aaron leases the building to the corporation,lease-rental payments of $30,000 per year to Aaron will result in $30,000 of gross income for Aaron.
D)Leasing the building to the corporation will contribute to the tax avoidance objective of minimizing double taxation.
E)All of the above are correct.

Question

Quizplus · Accepted Answer

All statements are correct: A) Contributing the building under § 351 results in no gain/loss recognition and a carryover basis. B) Lease payments are deductible for the corporation. C) Lease payments are taxable income for Aaron. D) Leasing avoids double taxation by keeping the asset outside the corporation.

Aaron Purchases a Building for $500,000 Which Is Going to Be