Question

Greta contributes property to form Unity Corp. and receives all 100 shares of Unity. A year later, Bjorn contributes property and receives 20 shares of Unity (total 120 shares of Unity outstanding). Which shareholder will receive deferral treatment under Section 351?

Answer 1

Answer:

Greta only

Explanation:

The shareholder that will receive the deferral treatment under Section 351 will be Greta

Therefore Immediately after Greta's contribution she will be the person to be in control of 80% or more which means she can controls up to 100% while Bjorn will only controls 16.67% which is (20÷120) after he or she made the transfer in which he may not include his with that of Greta's as a single transfer.