Sam and Rebecca form Cheers, Inc. Sam transfers a building in which his adjusted basis is $10,000. The fair market value of the building is $95,000. Rebecca transfers property which in her hands has been inventory, and in which her adjusted basis is $3,000. The fair market value of the inventory is $5,000. Sam receives 95 shares of Cheers common voting stock, and Rebecca receives 5 shares of common voting stock.

Question 6. If Rebecca received 5 shares of nonvoting preferred stock instead of voting common, would she be required to recognize the gain of $2,000?

CORRECT. Question 6N. Which of the following statements is NOT relevant to the conclusion that Rebecca does not recognize gain?

Rebecca and Sam, as transferors collectively control the corporation.

Rebecca owns only nonvoting stock.

Rebecca and Sam collectively own all of the voting stock.

Rebecca and Sam collectively own all of the nonvoting stock.

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