3 pages/≈825 words
Accounting, Finance, SPSS
Organizational Tax Research & Planning (Research Paper Sample)
A client engages you to determine how best to transfer property and perform services to a corporation in exchange for stock with minimal exposure to taxes and risk of an IRS audit. Assume the client is forming this corporation with two (2) other people who also plan to contribute property and services to the corporation. research the rules regarding the transfer of property and services to a corporation in exchange for stock. Include a review of the IRS to determine its level of interest and audits conducted related to this area. 1. determine the types and methods of transfers that will most likely trigger a taxable event for your client. Indicate how you are likely to present this information to your client. 2. evaluate which types of transfers are most likely to increase the risk of an IRS audti and the impact of the advice given to your client. 3. recommend the most advantageous types and methods of property and service transfers to your client in exchange for stock to minimize any tax liability and risk of audit. SUPPORT YOUR RECOMMENDATIONS WITH EXAMPLES. source..
Running head: ORGANIZATIONAL TAX Organizational Tax Research and Planning Name University Course Tutor Date Organizational Tax Research and Planning Methods of Property Transfers that will Most Likely Trigger a Taxable Event to the Client There are several methods which can be used to transfer a property to a corporation. These methods can trigger occurrence of a tax event when the property is transferred to a corporation. These methods have been discussed below. Non-recognition of Gain and Loss The general rule is that no gain shall be recognized if the property being transferred is in direct exchange for the stocks or securities. Under the general tax principles, when a property has been disposed of gain or loss has to be recognized (Hall, 2006). Gain or loss is usually the difference between the fair market value of the property and what the owner of the property receives in return. However, section 351 go against the general tax principles and provides that shareholders do not recognize gain or loss in some transfers of property to a controlled corporation in exchange for stock (Hall, 2006). The argument for this position is that the transactions which involve transfer of the property in exchange for stock merely change the form of investment that the shareholders make. Shareholder’s Basis in Stock The properties that qualify to be transferred to the corporation on shareholder’s basis in the stock have to meet some criteria. The shareholder’s basis in the property transferred has to be determined immediately before the transfer (Traum & Traum, 2009). Once it has been determined, they can subtract the liabilities of the shareholder that have assumed and cash and other non-stock properties that have been received by the shareholders. The gains recognized must als...
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