The difference in this one is that in CA, a community property state, a husband purchased a business for his wife, including goodwill in 2005. They also purchased other assets and section 179d all of them in the first year. Then, in 2006, they are taking the wife's sole proprietorship assets and transferring them into the husband's sole shareholder S corporation. Would you "gift" the assets from husband to wife (2005) and then "gift" them back in 2006 or would the fact that in an S corporation, all family members are considered one shareholder, so since they file joint income tax returns, it doesn't matter???
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Doesn't matter from a lot of angles...
CA community property: what yours is mine, what's mine is yours.
Unlimited gift tax exclusion from between spouses.
Section 318 family attribution rules and definition of a S Corps shareholder.
Probably the weakest is a joint return angle, but it may play here too.
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