Question

Which of these statements are true? please provide reasoning and irc citations

1In 351 transfer, a shareholder receives boot of $10,000 but ends up with a realized loss of

$3,000. Only $7,000 of the boot will be taxed to the shareholder.

2In 351 transfer, a shareholder who receives boot has a realized loss. None of the boot is taxed.

3In a 351 transfer, gain will be recognized to the extent of the greater of realized gain or the boot

received.

Answer 1

Which of these statements are true? please provide reasoning and irc citations
1) In 351 transfer, a shareholder receives boot of $10,000 but ends up with a realized loss of $3,000. Only $7,000 of the boot will be taxed to the shareholder.	FALSE	If a shareholder ends up with a realized loss, the receipt of the boot will not cause that loss to be recognized. The receipt of boot will only trigger a realized gain
2) In 351 transfer, a shareholder who receives boot has a realized loss. None of the boot is taxed.	TRUE	Losses may never be recognized on the exchange of property in a § 351 transaction
3) In a 351 transfer, gain will be recognized to the extent of the greater of realized gain or the boot received.	FALSE	Gain is recognized to the extent of the lesser of the gain realized or the boot received