Section 351 Irs

Received in an exchange to which section 351 applies for property with different bases and holding periods have split bases and split holding periods for purposes of determining long term or short term capital gain or loss.

Section 351 irs. Internal revenue code section 351 transfer to corporation controlled by transferor. 351 a general rule. 2 immediately after the exchange such person or persons are in control of the corporation as defined in irc section 368 c.

In a section 351 transaction generally is the same as the transferor s basis in the property or properties transferred to the corporation reduced by i the amount of money received as boot ii the amount of liabilities assumed by the transferee corporation excluding any. If the requirements of section 355 or so much of section 356 as relates to section 355 are met with respect to a distribution described in paragraph 1 then solely for purposes of determining the tax treatment of the transfers of property to the controlled corporation by the distributing corporation the fact that the shareholders of the distributing corporation dispose of part or all of. Section 351 a is intended to apply to certain transactions where gain or loss may have accrued in a constitutional sense but where in a popular and economic sense there has been a mere change in the form of ownership and the taxpayer has not really cashed in on the theoretical gain or closed out a losing venture.

Eric decides to contribute his heavy machinery to a newly formed corporation. Irc section 351 a broad rule applying to corporations generally defers from taxation any gain or loss incurred on property transferred to a corporation in exchange for stock. Under section 351 a no gain or loss is recognized reported provided.

Whether you re setting up a new corporation with just yourself or other people such as partners in a partnership or getting involved in an existing corporation under irc section 351 a you can defer put off any resulting tax consequence. General rule under section 351 a no gain or loss shall be recognized if 1 property is transferred to a corporation by one or more persons solely in exchange for stock in suchcorporation and. The requirements of irc section 351 are discussed below.