Final answer:
Ben may need to recognize his realized gain on the transfer of property to Aero in exchange for stock if he does not meet the 'control' requirement and the transaction does not qualify under Section 351 of the IRC for tax deferral.
Step-by-step explanation:
When Ben decided to transfer appreciated property to Aero in exchange for 45 percent of Aero's stock, he engaged in a transaction that has potential tax implications. Under U.S. tax law, specifically Section 351 of the Internal Revenue Code (IRC), a person who transfers property to a corporation in exchange for stock can generally do so on a tax-deferred basis if the transferors are in control of the corporation immediately after the exchange. 'Control' typically means ownership of at least 80% of the corporation's stock.
However, Ben only received 45 percent of the stock in exchange for his property, which means he does not meet the control requirement on his own. But if Robert, Kelly, and Ben's transfers to the corporation can be considered part of a plan, and collectively they control the corporation, the transaction might still qualify for deferral. The specifics of timing and other factors involved in the plan can affect whether the transaction qualifies under IRC Section 351.
If Ben's transaction does not fall under the exceptions of Section 351, he may be required to recognize his realized gain at the time of the transfer. This is because the exchange does not qualify as a tax-free contribution of property for stock. He would therefore need to report the difference between the fair market value of the stock received and the adjusted basis of the property transferred as a recognized gain on his tax return.