Final answer:
The statement about a corporation recognizing gain or loss in a Section 351 transfer is false; such transfers are generally tax-free if certain conditions are met. In a proprietary colony, the Proprietors' responsibilities extended beyond collecting profits, including managing the colony's affairs and providing for its defense and governance.
Step-by-step explanation:
True or false: A corporation that receives property in exchange for its stock in a Section 351 transfer recognizes gain or loss realized on the transfer. The statement is false. Section 351 of the Internal Revenue Code provides that no gain or loss is recognized if property is transferred to a corporation by one or more persons solely in exchange for stock in such corporation and immediately after the exchange such person or persons are in control of the corporation. In other words, as long as certain conditions are met, the exchange is generally tax-free at the corporate level.
In a proprietary colony, the Proprietors have no responsibilities except to collect the profits. The correct answer is b. False. Proprietors of a proprietary colony were responsible for much more than just collecting profits. They often had obligations to maintain the colony, including managing its finances, providing for defense, and establishing a form of government and legal system. The roles and responsibilities varied from colony to colony.