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Section 351 Exchange

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I was wondering, let's assume a 351 exchange occurred whereby the transferor had a realized gain. Since the realized gain did not involve boot, the transferor does not recognize any gain until the stock is sold. Let's also assume when the transferor sells the stock, the stock's value is below the basis. Am I correct that the transferor would have a loss?

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The expert examines section 351 exchange.

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To be able to discuss the case fully, let us first define what a Section 351 Exchange is. According to the IRS, under a Section 351 Exchange, there is no recognition of gain or loss on the date of exchange if and only if the property was exchanged solely for the stocks of a corporation ...

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