Bera and Chris decided that they no longer needed each other to grow their respective business and want to go their separate ways. Thus, they decided to effectuate the following transactions.
a. On December 31, 2021, Lala Co incorporated the art collection business into Art Co and distributed the stock in Art Co to Chris in redemption of Chris' stock in Lala Co. What is this form of § 355 distribution? What are the tax consequences to the parties?
b. Same as Problem 3.a except that Lala Co operated the business through Art Co in the inception, i.e., January 1, 2010. What are the tax consequences to the parties?
c. Same as Problem 3a, except that a few months before the distribution, Bera sold 80 shares to Abby, an unrelated person. After the distribution, Bera owns 20% of the stock of Lala Co, Abby owns 80% of Lala Co stock, Chris owns no stock in Lala Co, and Chris owns 100% of the Art Co stock. Does the distribution of Art Co qualify for a § 355 distribution?