C owns a patent right worth $25,000 and D owns a manufacturing plant worth $75,000. C and D organize the R Corporation with an authorized capital stock of $100,000.
C transfers his patent right to the R Corporation for $25,000 of its stock, and D transfers his plant to the new corporation for $75,000 of its stock.
Because C and D together transferred property solely in exchange for stock and are in control of the corporation immediately after the exchange, no gain or loss is recognized to C or D under section 351.
C and D each transfer property to the new corporation solely in exchange for its stock, not for cash or other consideration.
C and D together own 100 percent of R Corporation immediately after the exchange, satisfying the control requirement of section 368(c).
C receives 25 percent of the stock for $25,000 of property and D receives 75 percent for $75,000 of property.
Because the requirements of section 351 are met, neither C nor D recognizes gain or loss on the exchange.
