APPLICABLE LAWS & ANALYSIS

Applicable Laws & Analysis



Applicable Laws & Analysis

1 a. Question

A transfer of property to a controlled corporation qualifies for complete non-recognition under §351 AS it is solely in exchange for stock. Debt securities received in a §351 transaction are boot which may result in the recognition of gain under §351(b). At the shareholder level, §351 overrides these general tax principles by providing that shareholders do not recognize gain or loss on certain transfers of property to a controlled (i.e., 80% owned) corporation.

A shareholder who receives stock solely for services is not considered a transferor of property. If more ...