#IRC 351 CODE#

The IRC does state that stock issued for services indebtedness of the corporation or interest on indebtedness of the corporation is not considered to be issuance of stock in return for property.

Other information that is secret will be given consideration as property on a case-by-case basis according to my research through Parker Tax Publishing as they referenced both Rev. The IRC of course is the final authority and accordingly 351 property includes anything qualifying as secret processes or formulasВ under IRC 861(a)(4) and IRC 862(a)(4), and any other secret information, in the general nature of a patented invention even if it is NOT technically patented in the patent law sense. The IRS on the other hand has taken a narrower view of the term property under 351, specifically that know-how, trade secrets, and patent rights qualify under the definition only in certain circumstances subject to Revenue Rules 64-56 and 71-564. Generally it seems in my opinion the courts define property broadly and have a limited view of what can be excluded from property which means from my perspective that property transferred in a 351 exchange generally can be real or personal property. The IRC does not specifically define property in these regards howeverВ the courts and the IRS have attempted to do just that, define property relevant to 351. The people involved must transfer propertyВ to the corporation. However, a corporation can also include an associations, joint-stock company, or insurance company.Дў. The transaction must involve a corporationВ and a personВ (or people).ДЄ person may be an individual, trust, estate, partnership, association, company, or corporation under IRC 7701(a)(1)ДЄ corporation generally is an organization that is incorporated under state law.

#IRC 351 CODE#

The following 4 requirements must be met for a transaction to qualify as a Code Sec. This is often referred to as a nonrecognition or 351 transaction which is a reference to the tax code number governing the transaction. В§1.358-2(a)(2)(viii) and five arguments that support the conclusion that Code Section 368(a)(1)(B) should take priority.Дata Availability:вЂ‚The authors are willing to share the data contained in this issue and will make them available for use by others in extending or replicating results reported.If property is transferred to a corporation by one or more people solely in exchange for stock in the corporation and immediately after the exchange the person or people engaged in the exchange are in control of the corporation then generally speaking subject of course to certain thresholds no gain (or loss) is recognized for tax purposes. In an attempt to reduce this uncertainty, this paper provides a recommendation as to which code section should take precedent, supported by Treasury Reg. This uncertainty as to which code section should control adds unnecessary complexity when trying to achieve a specific tax result and runs the risk of being recharacterized by the IRS. There is no authority indicating which code section takes precedent, even though there are multiple court cases, Revenue Rulings, and Treasury Regulations that document the simultaneous application of these two code sections in a single situation. The effect of this distinction can be substantial. If the B reorganization rules are deemed to be controlling, then the basis in the stock received is required to be determined using the tracing method. If Code Section 351 is deemed to be controlling, then the basis in the stock received is required to be determined using the aggregate method.

This paper explores the overlap between Code Section 351 and Code Section 368(a)(1)(B) when a transfer of stock in one corporation for stock in another corporation occurs, detailing the distinction between the two in basis calculations.

Journal of Forensic Accounting Research Teaching Notes.

Journal of Forensic Accounting Research.

The Journal of the American Taxation Association.

Journal of Management Accounting Research.

Journal of International Accounting Research.

Journal of Information Systems Teaching Notes.

Journal of Governmental & Nonprofit Accounting Teaching Notes.

Journal of Governmental & Nonprofit Accounting.

Journal of Emerging Technologies in Accounting Teaching Notes.

Journal of Emerging Technologies in Accounting.

Current Issues in Auditing Teaching Notes.

AUDITING: A Journal of Practice and Theory.Issues in Accounting Education Teaching Notes.