R received $1,000 cash in addition to stock in a transaction that meets the requirements of § 355.If the transaction is a spin-off, R's basis for his stock will increase by $1,000.

Question

Quizplus · Accepted Answer

In a transaction that meets the requirements of § 355, such as a spin-off, receiving cash (boot) does not increase the basis of the stock. Instead, the cash received is generally treated as a distribution and may result in a taxable event to the extent it exceeds the shareholder's basis in the stock.

R Received $1,000 Cash in Addition to Stock in a Transaction