S owns 60 percent of the 100 shares of LMN, Inc.stock outstanding.His dad owns 20 shares, and his friend J owns the remaining 20 shares.S also owns 50 percent of OPQ's 100 shares outstanding while J owns the other 50 percent.Assuming S sells 40 shares of LMN to OPQ for a gain of $5,000, he is assured of exchange treatment.

Question

Quizplus · Accepted Answer

The sale of shares by an individual to a corporation does not automatically guarantee exchange treatment under tax laws. Exchange treatment typically applies to like-kind exchanges or specific corporate reorganizations, not to straightforward sales of stock for cash or other consideration.

S Owns 60 Percent of the 100 Shares of LMN