1. Do You have to be incorporated to be considered incorporated?
Answer: Page 45 A.
Loss of state charter does not eliminate the corporation.
Loss of charter means you have no standing in Court of law.
See Recent development and New Case

2. 46
Be careful
If the corp. is indistinguishable from the owner it can be collapsed.
Substance over form counts
Recent case took the opposite approach
See Page 46 under A.

3. Jim contributes property with a basis of $10,000 and a FMV of $100,000 for preferred stock.
Jim has nothing to worry about since under Code Sec. 351 he contributed property solely for stock.
There could be a potential for the preferred stock to be considered boot that could result in $90,000 of additional income.
Jim could have a control issue.
Both B. and C. apply.
Please see page 51 in the manual.

4. No Gain / No Loss Recognized49
351 Overview
XYZ Corporation
Basis FMV Cash $ 40,000 $ 40,000 AR $ ,000 Equip $ ,000 Goodwill $-0- $1,000,000
XYZ
STOCK
Property for Stock only
Notice that the business assets come over at BV unless a Gain is recognized in which case there is new basis in the hands of the corporation.
So what is this gain I am not recognizing – the difference between the FMV and the basis
You mean that “goodwill” is included – Yes
80 % Control
No Gain / No Loss Recognized

5. 51
351 Overview
4. Person/Persons – includes individuals, trusts, estates, partnerships or incorporations.
WARNING: With an LLC if you check the box or if you elect S Status you are by default entering into a 351 transaction. See check the box on page 64.

6. Danger Signals
Stock is received for services. (Page 50- C.2 ). Know who is Okay!(item 3)
5. Beware of Preferred Stock- causes issues. New Chief Counsel Advisory.
Shareholders contribute property in later periods. (Page 52 Item D- Example).
Boot is received – something other than stock. (Page 54- Item B).
Liabilities are contributed in excess of basis. (Page 55- Item E).

7. Restrictive Stock is taxed?
Page 57 Item F.1. When the restriction has ended the difference between the FMV and purchase price is ordinary income to the taxpayer.
PATAP

8. Is there away to minimize this taxation?58
Is there away to minimize this taxation?
Page 58 make an 83(b) election within 30 days of the receipt of the grant.
Model is available in Rev. Proc See page 67 for Model
PATAP

9. New Developments with 83(b)58
New Developments with 83(b)
In the NOTE
Prop. Reg starting in 2016 – The election no longer needs to be attached to the return.
This was to facilitate E-filing.

10. 50
REIT Issues
NEW PLRs: Disregarded entity’s transfer of property to REIT tax free under Sec 351.