Tammy forms White Corporation in a transaction qualifying under § 351. In that transaction, Tammy transferred cash and equipment in exchange for White Corporation common 1,000 shares) and preferred 200 shares) stock. The preferred stock is not § 306 stock for Tammy.

Question

Quizplus · Accepted Answer

Under § 351, a transferor does not recognize gain or loss when property is exchanged solely for stock in a corporation if the transferor is in control of the corporation immediately after the exchange. The type of stock (common or preferred) received does not affect the application of § 351, and the fact that the preferred stock is not § 306 stock simply means that special rules governing distributions of certain stock do not apply, but it does not affect the qualification of the transaction under § 351.

Tammy Forms White Corporation in a Transaction Qualifying Under §