Lesson 4.2.1 Property and Services: Concepts

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來自 University of Illinois at Urbana-Champaign 的課程

Taxation of Business Entities I: Corporations

22 個評分

University of Illinois at Urbana-Champaign

Taxation of Business Entities I: Corporations

22 個評分

課程 3（共 5 門，Specialization U.S. Federal Taxation）

This course provides an introduction to the U.S. federal income taxation of corporations and their shareholders. The course focuses on the relevant provisions of Subchapter C of the Internal Revenue Code, as well as related Treasury Regulations and judicial opinions, governing corporate formation, operations, distributions, and liquidation. Practical in-class study problems facilitate self-discovery of technical tax knowledge along with the development of a variety of professional skills and attitudes.

從本節課中

Module 4: Corporate Formation II

In this module, you will continue to explore property-for-stock transactions. Assumption of liabilities and transfer of services along with property will be introduced. Next, you will examine the effects of capital contributions on corporations, shareholders, and non-shareholders. You will also analyze the rules for debt and equity regarding capital structure. Finally, investor losses due to worthlessness of debt/equity investments and bad debts will be discussed.

Lesson 4.2.1 Property and Services: Concepts2:32

Lesson 4.2.2 Property and Services: Applications6:43

與講師見面

Michael P Donohoe, PhD, CPA
Associate Professor of Accountancy and PwC Faculty Fellow
Department of Accountancy, Gies College of Business

You previously learned that stock issued for services is not

considered as issued in return for property under Section 351.

To complete the coverage of non-recognition rules for corporate formation,

in this lesson you will consider whether and how stock issued in exchange for

both property and services affects the control requirements of section 368(c).

You will then apply the new concepts to Sunchaser Shakery.

Recall that the provision of services does not

constitute the transfer of property for purposes of Section 351.

Instead, any stock received by

the service provider is viewed as compensation for the services,

and is not considered when assessing control.

However, if a person transfer services

and property to a corporation in exchange for stock,

taxable income results for the value of the stock related to the services,

but not for the stock related to the property;

assuming the other requirements of section 351 are satisfied.

In addition, the person is viewed as a transferor for purposes of determining whether

all transfers acquired control of the corporation immediately after the exchange,

as long as an adequate amount of property is transferred.

How much property is adequate?

The regulations require that the person providing services must also transfer

property with more than a relatively small value compared to the services.

In other words, when the primary purpose of the transfer is to

qualify the transaction for Section 351,

treatment for other transferors,

stock issued for property whose value is

small compared to the value of the stock already owned

or to be received for services provided will

not be considered as issued in return for property.

The regulations do not clearly define the phrase relatively small value.

However, revenue procedure 77-37 indicates that

a transfer or of both services and property can be included in the transferor group;

If the fair market value of the property transferred is equal to or in excess of

10 percent of the fair market value of the stock already

owned or to be received for services by the transferor.

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