This lesson is best used after studying Corporate Taxation in class. The lesson allows you to apply section 351 of the Internal Revenue Code and related Treasury Regs. to a variety of situations involving the basic issues of formation of C corporations.
On completion of the lesson, the student will be able to:
1. Explain that § 351 provides nonrecognition treatment for transferors of property to a controlled corporation.
2. Explain that § 1032 provides a corporation with nonrecognition treatment for use of its own stock in an exchange for cash, property, or services.
3. Calculate the amount of gain recognized under § 351(b) if boot is received in a § 351 transfer.
4. Determine a property transferor's basis and holding period in the shares received in a § 351 transaction.
5. Determine the corporation's basis and holding period in gain property received by the corporation through a § 351 transaction.