What john stands to benefit from proposal

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Reference no: EM133347072

Question: John plans to transfer the assets and liabilities of his business to Newco in exchange for all of Newco's stock. The assets have a $250,000 basis and an $800,000 FMV. John also plans to transfer $475,000 of business related liabilities to Newco. Under Sec. 357(c), can John avoid recognizing a $175,000 gain (the excess of liabilities over the basis of assets transferred) by transferring a $175,000 personal promissory note along with the assets and liabilities?

Within your business memo, please address the proposal, what John stands to benefit from this proposal, and if this is something he can do - why or why not? Then give your recommendation as to John's next course of action.

Reference no: EM133347072

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