ETAX Corporation Income and Deductions R17-168X

State the requirements for the formation of a corporation to be deemed a control club.

• Members contributing property must own at least 80% of voting and non-voting stock, after the transfer.
• Property must be contributed in exchange for stock.
• Property must be transferred solely in exchange for stock. Transfer cannot be a reciprocal exchange.
• The value of services contributed does not count towards the control test.
• Shareholders contributing services must contribute property valued ≥ 10% of FMV of services, to be part of the control test.
• If boot is received, gain not loss is recognized.
• To meet the 80% control group rules, existing shareholders may contribute property valued ≥ 10% of FMV of stocks owned b4 contribution.