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What are the requirements for both the corporation and shareholder in order to comply with the...

What are the requirements for both the corporation and shareholder in order to comply with the statute? rovide an example a how a new corporate formation can benefit from IRC 351.

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Answer #1

Please specify the statue which you want to be answered of.

As for second part of the quesiton:

IRC 351 defers the tax on transfering of the asset to the corp. newly formed provided the transaction leads to CONTROL of the corporation immediately after the exchange and only stock is exchanged for the assets.

The rationale behind this was to allow unincorporated businesses to develop, unimpeded by any immediate tax consequence resulting from the exchange of property for stock.

Thus new corp. formation can benifit as no direct tax consequene on company as well as shareholders shall be there.

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