Video: Introduction to Corporations: Entity/Owner Transactions

In this lesson, Nick Palazzolo, CPA, breaks down transactions between entities and owners involving corporations, clarifying the complexities of formation and subsequent stock transfers. He highlights the tax implications of these transactions, particularly the critical 80% control rule during formation, which allows shareholders to avoid immediate tax consequences when they transfer property for stock. Nick also contrasts this with later transactions where failing to meet the 80% control can result in recognition of gain or loss. By walking through scenarios where contributions do not lead to the desired tax benefits, he sheds light on the intricacies of managing an ownership stake in a corporation, making sense of these foundational concepts with practical examples.