Corporate Taxation: Formation: Formation of C Corporations: Basic Issues

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.

Learning Outcomes

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.