31) Corporations that are members of a brother-sister affiliated group may file a consolidated return if the proper election is made.
32) If certain requirements are met, Sec. 351 permits deferral of recognition of gain or loss on the transfer of property to a corporation solely in exchange for stock of the corporation.
33) In order for the Sec. 351 nonrecognition rules to apply, the transferor-shareholders in aggregate must control the transferee corporation by owning more than 50% of its stock immediately after the exchange.
34) Depreciation recapture does not apply to a transfer coming under Sec. 351 unless the transferor recognizes gain on depreciable property that is transferred.
35) If a shareholder transfers liabilities to a corporation in a Sec. 351 transfer, there is no effect on the corporation's stock basis due to the corporation's assumption of liabilities.
36) In a Sec. 351 transfer, the corporation takes the shareholder's adjusted basis in the contributed property, regardless of whether the property's FMV is greater than or less than its adjusted basis at the date of contribution.
37) Peter transfers an office building into a new corporation in exchange for 100 percent of the stock. In addition, the corporation assumes the mortgage on the building. Peter will treat the debt relief as boot and have to recognize gain.
38) The term “thin capitalization” means that the corporation is financed primarily with capital stock rather than debt.
39) If a corporation has no E&P, a distribution is ordinary income to the extent of the shareholder's basis with any excess treated as capital gain.
40) A corporation's E&P is equal to its taxable income for the year.