Transferor contributed $120,000 to a newly formed corporation in exchange for stock.At the time of the contribution, the corporation's total contributed capital was $5 million.Transferor's stock qualifies as § 1244 stock.

Question

Quizplus · Accepted Answer

For stock to qualify as § 1244 stock, among other requirements, the total capital contributed to the corporation (including both money and property) must not exceed $1 million at the time the stock is issued. Since the corporation's total contributed capital was $5 million, the stock does not qualify as § 1244 stock.

Transferor Contributed $120,000 to a Newly Formed Corporation in Exchange