Question

Adele contributed both ordinary and capital assets to a corporation in exchange for stock in a qualifying §351 exchange. Her holding period for the stock ______.

a. begins on the date of the exchange.
b. carries over from the holding period of the contributed assets.
c. starts on the date the stock is sold.
d. resets to zero.

Answer 1

Adele's holding period for the stock received in a qualifying § 351 exchange carries over from the holding period of the contributed assets.

Step-by-step explanation:

When Adele contributed both ordinary and capital assets to a corporation in exchange for stock in a qualifying § 351 exchange, her holding period for the stock carries over from the holding period of the contributed assets. This means that the length of time she held the assets before the exchange is counted towards the holding period of the stock. Therefore, the correct answer to the question is b. carries over from the holding period of the contributed assets.