Question

a. Non-recognition of gain or loss on contributions applies only if those persons transferring property to the entity are in control of the entity immediately after the exchange. b. Non-recognition of gain or loss on contributions applies to initial transfers as well as all subsequent contributions to the entity. c. If the transfer of property involves the receipt of money or other consideration, the transaction may be deemed a sale or exchange rather than a tax-free transfer. d. Nonrecognition provisions do not apply to all transfers made by the owners.

Answer 1

The answer is Option D) Nonrecognition provisions do not apply to all transfers made by the owners.

Step-by-step explanation:

According to the Internal Revenue Service, a nonrecognition transaction is a non-claimable gain or loss which applies as long as a reorganization occurs and property is exchanged solely for stock or securities.

When assets are distributed in these scenarios, the gain or loss is a nonrecognition transaction that is excluded from taxation.