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Using Code Section 351 for Asset Protection

You can use section 351 for asset protection by exchange your assets for stock in a corporation. That asset is no longer at risk to your personal creditors. Is this true? Does it matter whether the transfer is to a C Corporation or an S Corporation?

Solution Preview

This is true only to an extent. People do try to hide their assets in a corporation, but it almost always turns on them and creates even bigger problems. If a taxpayer finds out that a lien has been placed against their assets and in an attempt to protect their assets, they transfer the assets in a 351 exchange, the creditor can still attach a lien to the assets because the taxpayer has ...

Solution Summary

This solution discusses using Section 351 for asset protection by exchanging your assets for stock in a corporation. I also discuss if the asset is still at risk to personal creditors after the asset is transferred to the corporation, and if it matters whether the transfer is made to a C corporation or an S corporation. References are also provided for further expansion.

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