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Instructions: This is an individual assignment. The memo should not exceed two pages and students should use the tax memo template provided. However, the answer should be a full 2 pages (double spaced, times new roman 2pt., -inch margins) Do not repeat the question in the answer. Each memo must include an explanation of the relevant code sections, regs and/or other relevant controlling authority such as case law. Don’t just cite the rules or cases, explain them and their application to the specific facts in the questions. Any memo with a similarity score exceeding 25% on Turnitin will be rejected subject to the professor’s review and sole discretion. Any AI % will be an
Questions:
Does the transaction satisfy the nonrecognition rules of Section 35? Answer each hypothetical separately. (hint: consider whether the steps in transaction disqualify the transaction. Also, the regulations and revenue rulings may help here!)

Hypothetical #:
T. Swit owns all of the stock of corporation Swit X and operates a second business similar to that of Swit X through a sole proprietorship. Pursuant to an agreement between T. Swit and Alwyn Inc., an unrelated corporation, T. Swit transfers all of the assets of the sole proprietorship to Swit X in exchange for additional shares of Swit X stock. T. Swit then transfers all her Swit X stock to Alwyn Inc. solely in exchange for voting common stock of Alwyn, Inc.
Hypothetical #2:
Parent Corporation owns 80 percent of the stock of a subsidiary, S. An unrelated corporation owns the remaining 20 percent. Parent transfers assets to S solely in exchange for additional shares of S stock. As part of the same plan, S transfers the same assets to S2, a newly formed corporation of which S will be an 80 percent shareholder. An unrelated corporation will own the remaining 20 percent of the S2 stock.
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