Table of Contents
What is the purpose of section 351?
Section 351(a) provides that no gain or loss shall be recognized if property is transferred to a corporation by one or more persons solely in exchange for stock in such corporation and immediately after the exchange such person or persons are in control (as defined in § 368(c)) of the corporation.
What are the SEC 351 reporting requirements?
What are the Sec. 351 reporting requirements? A. The transferee must attach a statement to its tax return for the year in which the exchange took place, including a description of property, liabilities, and the stock and property transferred in the exchange.
What benefit does the government get from allowing IRC section 351?
IRC Section 351 permits a shareholder to contribute property and receive some form of value in addition to corporate shares. Additional value received is commonly known as boot. The shareholder, however, will have tax liability for the non-stock value received from the corporation.
Does 351 apply to S corps?
In the case of a contribution of appreciated property to an S corporation in order to obtain tax deferral, IRC section 351(a) requires that the transferor shareholder, along with all other shareholders making contemporaneous contributions of property, control the corporation immediately after such transfer, and IRC …
What is a 351 transfer?
351 allows a tax-free incorporation transfer if certain requirements are met, including that the property must be transferred to a corporation by one or more persons in exchange for stock in the corporation, and, immediately after the exchange, the transferor(s) is (are) in control (as defined in Sec.
How does the assignment of income doctrine apply to a Sec 351 exchange?
351 exchange. The assignment of income doctrine does not apply if the transferor in a Sec. 351 exchange in which no gain is otherwise recognized transfers substantially all the assets and liabilities of the transferor’s trade or business to the controlled corporation.
What items are considered to be property for purposes of Sec 351 A?
351(a)? For purposes of Sec. 351, the following items are considered to be property: Money and almost any other kind of tangible or intangible property, including installment obligations, accounts receivable, inventory, equipment, patents, trademarks, trade names, and computer software.
What is considered property under section 351?
Property for purposes of section 351 includes “secret processes and for- mulas,” and any other secret information pertaining to processes in the general nature of a patentable invention, without regard to whether a patent has been applied for or whether the information is patentable.
Which IRC section defines control under a 351 transfer?
Section 368(c) defines control: Control means the ownership of stock possessing at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the total number of outstanding shares of all other classes of stock of the corporation.
What are the SEC 351 reporting requirements quizlet?
What are the Sec. 351 reporting requirements? The transferee must attach a statement to its tax return for the year in which the exchange took place, including a description of property, liabilities, and the stock and property transferred in the exchange. Parties included in the Sec.
Can a section 351 transaction defer the taxable income if that property is contributed?
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. You are in CONTROL of the corporation immediately after the exchange.
Is there any depreciation recapture under a Code Sec 351 exchange?
In a Section 351 transfer in which no boot is received and, therefore, no gain is recognized, there is no recapture of depreciation.
What is the purpose of IRS code 351?
Internal Revenue Code section 351 permits shareholders of a corporation to defer recognition of a gain or loss on the transfer of assets to the corporation. The transfer of property may be made when a new corporation is formed or may reflect additional capital contributions…
What are the requirements for incorporation under Sec 351?
Sec. 351 allows a tax-free incorporation transfer if certain requirements are met, including that the property must be transferred to a corporation by one or more persons in exchange for stock in the corporation, and, immediately after the exchange, the transferor (s) is (are) in control (as defined in Sec. 368 (c)) of the corporation.
Can a gain or loss be recognized under Section 351?
LAW Section 351(a) provides that no gain or loss shall be recognized if property is transferred to a corporation by one or more persons solely in exchange for stock in such corporation and immediately after the exchange such person or persons are in control (as defined in § 368(c)) of the corporation.
What makes a transfer tax free under sec.351?
P2′ s transfer qualifies for tax-free treatment under Sec. 351 because P2 has acquired 80% of the total combined voting power of all classes of stock entitled to vote, and there are no other classes of shares. P2′ s ownership of the Class B shares dilutes or diminishes P1′ s voting power.