Is there another way to avoid recognizing the gain on a 351 transaction besides the one given below?
There are ways to play this system. The reason that the tax on a 351 transaction is deferred until the stock is sold is because the person's basis in the stock received in a 351 transaction is the same as the basis in the property that was transferred to the corporation for the stock. That means that whatever gain was realized in the 351 transaction (the difference in the basis in the property transferred and the value of the stock received) is recognized when the stock is sold. However, if I am involved in a 351 transaction and never sell my stock and leave that stock to someone in my will, the person who receives that stock gets the stock with a basis equal to the stock's fair market value on the date of my death, so, at least in theory, that gain that is deferred by 351 disappears and is never taxed. Of course, that's an extreme example but, still, an example of how to avoid the gain on a 351 transaction.
Solution Preview
Below is your study guide.
Given your example and discussion on a way to further avoid the recognition and therefore the tax liability or benefit associated with the gain or loss on a Section 351 exchange, I assumed that you know Section 351 and its concepts pretty well; hence I didn't include a discussion about these ...
Solution Summary
The expert examines avoiding the gain on a section 351 transactions.
... To avoid a re-characterization of debt to equity ... In the reverse (moving to a corporation), Section 351 is commonly ... will usually result in a capital gain or loss ...
... Conditions to avoid classification of shareholders loans as ... of distributed property and IRC section 754 serves to ... liquidation is done and the gain generated is ...
... of the voting stock, thereby avoiding consolidation of ... Under what conditions can HP avoid recognition of ... adjustment are limited to translation gains and losses ...
... x[xii,Xii + v] and, to avoid being penalized ... the value of re- lationship and the total deviation gain. In the next section, we examine and characterize the ...
... Q is a crude means of avoiding the problem ... This approach avoids estimating as eparate debt equation ... "Security Prices, Risk and Maximal Gains from Diversification ...
... by the lower price to release the option and avoid the staff ... transient sections of their workforce ... have some parts of the sector sought to gain competitive but ...
... goals, emphasize extrinsic rewards, avoid unnecessary risks ... designed to maximize organizational and individual gains. ... The next section addresses another study ...
... to control motivation and to avoid premature skipping of ... In order to gain insight into the volitional ... This section reports results from a longitudinal study ...
... confidentiality is rooted in one section of the ... Provisions are usually made for gain- tients who had ... Chicago: American Medical avoid a constitutional violation ...