§351 — Transfer to corporation controlled by transferor

District Court for the Northern District ofIllinois seeking to "Unlike the sec. 351 statement included with the Bodacious return, the sec.

Section 351(a) does not apply to the extent that the transferee's stock received in the exchange is NQPS.

1946), that a corporation could deduct legal fees paid in connection with resolving a liability transferred to it by a predecessor partnership in a section 351 transaction. Upon reconsideration, we believe Holdcroft Transp. Co. is distinguishable.

In the example, a corporation receives a security from its newly formed subsidiary in a section 351 exchange, and the security is later redeemed.6 In 1966, when these regulations were implemented, and at all times through the year at issue, no gain or loss was recognized under the Code on the receipt of a 5(...continued) Regs., is inapplicable both to the 1977 stock redemption and the 1987 note redemption.

We need not decide whether the burden of proof shifts to respondent under section 7491(a) because we decide this case on the basis of the preponderance of the evidence .

We disagree with petitioner husband’s beginning basis, which used the balance sheet as it existed at the end of the year.

Whether Section 351 Governs the Tax Consequences ofthe Transaction Section 351(a) provides: "No gain or loss shall be recognized ifproperty is transferred to a corporation by one or more persons solely in exchange for stock in such corporation and immediately after the exchange such person or persons are in control * * * ofth

Whether Section 351 Governs the Tax Consequences ofthe Transaction Section 351(a) provides: "No gain or loss shall be recognized ifproperty is transferred to a corporation by one or more persons solely in exchange for stock in such corporation and immediately after the exchange such person or persons are in control * * * ofth

351 applies, if the sum of the liabilities assumed plus the- amount of the liabilities to which the property is - subject exceeds the total adjusted basis of the property transferred, then such excess shall be recognized as gain to the transferor.

-31- [*31] section 351. Moreover, the duty of consistency might prevent it from taking a contrary position.13 13As we explained in Cluck v. Commissioner, 105 T.C. 324, 331 (1995), a "taxpayer owes the Commissioner the duty to be consistent in the tax treatment of items and will not be permitted to benefit from the taxpayer's own prior error or omission." The duty applies when, after the expiration of the period of limitations on assessing tax for an earlier year, the taxpayer, for the purpose of

-31- [*31] section 351. Moreover, the duty of consistency might prevent it from taking a contrary position.13 13As we explained in Cluck v. Commissioner, 105 T.C. 324, 331 (1995), a "taxpayer owes the Commissioner the duty to be consistent in the tax treatment of items and will not be permitted to benefit from the taxpayer's own prior error or omission." The duty applies when, after the expiration of the period of limitations on assessing tax for an earlier year, the taxpayer, for the purpose of

hased by a corporation (corporation X) from its shareholders for less than fair market value and - 35 - [*35] subsequently exchanged for 80% ofthe newly issued stock ofanother corporation (corporation Y), in a transaction in which no gain or loss was recognized by either corporation under sections 351(a) and 1032(a). The revenue ruling first concludes that section 358(a) should not determine the basis ofthe stock received by each corporation-- Section 358(a) * * * provides * * * rules for deter

In the revenue ruling the IRS ruled that certain contingent environmental liabilities that a transferee assumed in a section 351 exchange were not liabilities for purposes of sections 357(c)(1) and 358(d) and that the transferee, in accordance with its method of accounting, could, as appropriate, either deduct the liabilities as business expenses under section 162 or capitalize the liabilities as capital expenditures under section 263.

Section 351 Disclosure Statement” which indicated that on December 27, 1999, Bodacious received from Mr. Gaughf an interest in an unnamed partnership having a basis of $4,513,528, that Mr. Gaughf received no property, money, or securities in exchange, and that Bodacious assumed no liabilities as a result of the transfer. The Bodacious return also r

Petitioners also assert hat they contribut-ed.the crops and USDA payments to the corporation and therefore ,the corporation earned the income . Petitioners' focus on section 351 is misplaced. ,That 4 section governs the transfer of property to a corporation in exchange for stock in the" corporation. See sec. 351.. Moreover, petitioners

In the example, a corporation receives a security from its newly formed subsidiary in a section 351 exchange, and the security is later redeemed.

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its (cid:16)04s2hares of Cedilla Invest. and Zeus, plus $60, 000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of.receivables (exchanged during 1988 for a $64,000 receivable from HELO) . No payments were made by Holding Co. or the others on the receivables, and no efforts were ever ma

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

in a section 351 exchange for all of its shares of Cedilla Invest. and Zeus, plus $60,000.25 Zeus continued to hold an $807,028 receivable from Holding Co. plus $64,000 of receivables (exchanged during 1988 for a $64,000 receivable from HELO). No payments were made by Holding Co. or the others on the receivables, and no efforts were ever made to collect

Respondent acknowledges that petitioner was entitled to nonrecognition of gain under section 351 upon the transfer of assets to SIC in exchange for its stock but argues that petitioner recognized gain under section 311(b) on the immediately following distribution of the SIC stock to Arnold in redemption of his stock in petitioner.

Caufield testified at trial that this document represented his initial computation of petitioners' section 351 transfer.

itioner also offered into evidence a Jan. 3, 1997, memorandum from Messrs. Rokoff and Knott of Shearman & Sterling. The memorandum discusses a proposed transaction involving SMP’s transfer of high-basis assets to an existing corporation as part of a sec. 351 contribution. The memorandum does not analyze or discuss the transaction between the Ackerman group and CDR. In fact, the memorandum states that “P’s current members acquired a substantial portion of their interests in transactions unrelated

On or about May 15, 1983, Kanter directed the transfer of the grantor trusts’ real estate partnership interests to Cashmere in what was intended to be a nontaxable exchange under section 351 in return for Cashmere common and preferred stock.

On or about May 15, 1983, Kanter directed the transfer of the grantor trusts’ real estate partnership interests to Cashmere in what was intended to be a nontaxable exchange under section 351 in return for Cashmere common and preferred stock.

On or about May 15, 1983, Kanter directed the transfer of the grantor trusts’ real estate partnership interests to Cashmere in what was intended to be a nontaxable exchange under section 351 in return for Cashmere common and preferred stock.

On or about May 15, 1983, Kanter directed the transfer of the grantor trusts’ real estate partnership interests to Cashmere in what was intended to be a nontaxable exchange under section 351 in return for Cashmere common and preferred stock.

On or about May 15, 1983, Kanter directed the transfer of the grantor trusts’ real estate partnership interests to Cashmere in what was intended to be a nontaxable exchange under section 351 in return for Cashmere common and preferred stock.

apitalized for the purpose of engaging in this transaction. Mr. Parmentier was not interested in any true investment in RD Leasing. He wanted cash but agreed to take and hold the RD Leasing preferred stock only in order to qualify the exchange under section 351. RD Leasing was required to maintain sufficient funds to pay the liquidation preference to Mr. Parmentier. We see no apparent reasons for the use of an exchange of the preferred stock for Mr. Parmentier’s interest in Andantech other than

- 7 - After the section 351 transaction, Seggerman Farms refinanced a portion of the transferred debt.

- 7 - After the section 351 transaction, Seggerman Farms refinanced a portion of the transferred debt.

e SIC was not engaged in the active conduct of a trade or business after the distribution of SIC stock to A. 4. Held, further, although MIC's transfer of intangible assets to SIC in exchange for SIC stock was entitled to nonrecognition of gain under sec. 351, I.R.C., the immediate distribution of SIC stock in redemption of A's stock in MIC was a distribution of appreciated property under secs. 311(b) and 317(b), I.R.C., on which recognized gain in the amount of $141,000 is taxable to MIC under s

The parties have stipulated that petitioner recognized no gain or loss upon the transaction whereby its glass business was transferred to LOF Glass, Inc., pursuant to the provisions of section 351 or sections 354, 355, and 368(a)(1)(D) (except as required by such sections or section 357(c)), and that pursuant to section 355 neither petitioner nor Pilkington Holdings recognized any gain or loss upon the exchange of LOF Glass, Inc., shares for the LOF shares.

The parties agree that the transactions under scrutiny qualify under the nonrecognition provision of section 351, except as that section may be limited by section 357(a) and (c)(1).

Accordingly, the funds it received in 2015 are income to CSI for that year. See § 61; see also Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 430 (1955). Petitioners contend that the funds CSI received in 2015 may be excludable from income under section 351. This “capital contribution” theory is different from any theory advanced by petitioners in their Petitions, at trial, or in their posttrial briefs. Because petitioners failed to articulate the section 351 “capital contribution” theory in

113, regarding the treatment of know-how as property in a section 351 transfer.

income would not be deemed, and income would be measured using [the] amount realized (or purchase price) rather than fair market value. Pet’r’s Opening Br. 31. Section 904(f)(3) does, however, sometimes conflict with nonrecognition provisions (e.g., section 351). And it does sometimes conflict with sourcing rules (e.g., section 865), as in the case before us. And in those circumstances, the rule of section 904(f)(3) prevails over the conflicting rule elsewhere in the Code. In short, although the

The taxpayers formed an S corporation and, in a section 351 transaction, the taxpayers transferred their interest in the UMLIC 12 [*12] Entities to the S corporation in exchange for common stock.

person to a foreign corporation only if the transfer takes the form of “an exchange described in section 351 or 361.” For an exchange to be described in section 351 or 361, it must be a transfer of property in exchange--at least in part--for stock of the recipient.

See also Blossom II, at *26.

at there is no basis for equitable estoppel when the Commissioner has knowledge of the facts. Manhattan Bldg. Co. involved a taxpayer who for a prior, closed year erroneously treated a transfer of real property as nontaxable under the predecessor to section 351. The Commissioner had audited the prior year’s return and did not adjust the claimed carryover basis. Id. at 1037, 1039, 1041-1042. On the sale of the real property nearly 20 years later, the taxpayer argued that the prior transfer was ta

The record establishes that this transaction was properly treated as a section 351 contribution and recorded as such on all relevant books and records maintain- ed by the ITW Group.

Transferor ofProperty to a Foreign Corporation, dated June 29, 2002, CHPR reported that on December 17, 2001, it had transferred assets in a section 351 nonrecognition transaction.

In a section 351 transaction each petitioner transferred to the company his respective ownership interests in the UMLIC entities, with a cost basis of$142,566, in exchange for 47,500 shares of the company's common stock. There were three primary reasons for this consoli- dation: to reduce the number oftax return filings and financial statement reports;

In a section 351 transaction each petitioner transferred to the company his respective ownership interests in the UMLIC entities, with a cost basis of$142,566, in exchange for 47,500 shares of the company's common stock. There were three primary reasons for this consoli- dation: to reduce the number oftax return filings and financial statement reports;

The payments therefore provided significant economic benefit to Mr. Johnson and his business, Clean Hands. See Stinnett's Pontiac Serv., Inc. v. Commissioner, T.C. Memo. 1982-314 (holding that when a shareholderwas required to make capital contributions and caused a related company to pay the contributions, the payments were for the perso

Phillips wrote a memorandum describing Fortrend's plan to offset the gains from the asset sale by contributing high basis/low value assets to Berlinetta in a section 351 - 7 - [*7] transaction and selling those assets at a loss before the end of2001.

The Internal Revenue Service takes the position that genuine non-tax business purposes must be present in the case ofan asset contribution in order for a transaction to meet the requirements of Section 351 ofthe Internal Revenue Code of 1986, as amended (the "Code").

Phillips wrote a memorandum describing Fortrend's plan to offset the gains from the asset sale by contributing high basis/low value assets to Berlinetta in a section 351 - 7 - [*7] transaction and selling those assets at a loss before the end of2001.

The section 936 possession corporations each contributed substantially all oftheir operational assets, including employees, machinery, equipment, land, contracts, and associated liabilities to MPROC in exchange for MPROC stock in a section 351 nonrecogmtion transaction.

Treasury bills with a face value of$140,000 and $100,000 cash to MAC in a section 351 transaction.

The payments therefore provided significant economic benefit to Mr. Johnson and his business, Clean Hands. See Stinnett's Pontiac Serv., Inc. v. Commissioner, T.C. Memo. 1982-314 (holding that when a shareholderwas required to make capital contributions and caused a related company to pay the contributions, the payments were for the perso

Phillips wrote a memorandum describing Fortrend's plan to offset the gains from the asset sale by contributing high basis/low value assets to Berlinetta in a section 351 - 7 - [*7] transaction and selling those assets at a loss before the end of2001.

Treasury bills with a face value of$140,000 and $100,000 cash to MAC in a section 351 transaction.

The Internal Revenue Service takes the position that genuine non-tax business purposes must be present in the case ofan asset contribution in order for a transaction to meet the requirements of Section 351 ofthe Internal Revenue Code of 1986, as amended (the "Code").

Phillips wrote a memorandum describing Fortrend's plan to offset the gains from the asset sale by contributing high basis/low value assets to Berlinetta in a section 351 - 7 - [*7] transaction and selling those assets at a loss before the end of2001.

Treasury bills with a face value of$140,000 and $100,000 cash to MAC in a section 351 transaction.

The Internal Revenue Service takes the position that genuine non-tax business purposes must be present in the case ofan asset contribution in order for a transaction to meet the requirements of Section 351 ofthe Internal Revenue Code of 1986, as amended (the "Code").

ation ofthe refinery property (environmental remediation expenses). Id. The taxpayerprovided the funds used - to pay those expenses. Id. The taxpayer claimed deductions of$339,435, "In September 1996, the owner ofthe refinery property entered into a sec. 351 transaction with another ofThrifty's subsidiaries. Thrifty Oil Co. v. Commissioner, 139 T.C., 198, 200 (2012). In exchange for 90 shares ofthe latter subsidiary's stock, the owner ofthe refinery property transferred to that subsidiary a prom

In a section 351 transaction, each petitioner t ansferred his unrestricted ownership interest in the UMLIC Entities to UMLIC -Corp. in exchange for 47,500 shares ofits common stock. Concurrently, UMLIC S-Corp. issued 5,000 shares ofits common stock, in exchange for a note, to an employee stock ownership plan (ESOP) for its employees, including petitione

After concessions,2 the only issue for decision is whether income received by petitioner husband's S corporation in a section 351 transaction with its subsidiary should be reclassified as ordinary income under section 1239.

In a section 351 transaction, each petitioner transferred his unrestricted ownership interest in the UMLIC Entities to UMLIC S-Corp. in exchange for 47,500 shares of its common stock. Concurrently, UMLIC S-Corp. issued 5,000 shares of its common stock, in exchange for a note, to an employee stock ownership plan (ESOP) for its employees, including petiti

Gadarian dated November 21, 2001, he explains Fortrend's plan to offset the gains from the asset sale by contributing high basis/low value assets to - 24 - Berlinetta in a section 351 transaction and selling those assets at a loss before the end of2001.

On September 27, 1996, Golden West and Earth Management engaged in a section 351 transaction.

Parker in which MBAF determined that the best way to offset the $7 million ofcapital gains for 2004 was to have Vilanova, petitioner's parent corporation, contribute to petitioner in a section 351 transaction shares ofstock.with a built-in loss.5 MBAF included a warning that the IRS could disallow the loss deduction to petitioner ifVilanova's transfer ofthe built-in loss asset did not have a legitimate business purpose.

Gadarian dated November 21, 2001, he explains Fortrend's plan to offset the gains from the asset sale by contributing high basis/low value assets to - 24 - Berlinetta in a section 351 transaction and selling those assets at a loss before the end of2001.

Parker in which MBAF determined that the best way to offset the $7 million ofcapital gains for 2004 was to have Vilanova, petitioner's parent corporation, contribute to petitioner in a section 351 transaction shares ofstock.with a built-in loss.5 MBAF included a warning that the IRS could disallow the loss deduction to petitioner ifVilanova's transfer ofthe built-in loss asset did not have a legitimate business purpose.

On September 27, 1996, Golden West and Earth Management engaged in a section 351 transaction.

ral.--The term "purchase" means any acq isition of stock, but only if-- (i) the basis of the stock in the hands of the purchasing corporat'ion is not detei-mined (I) in whole-or in part by referŠnce to the adjusted basis of such stodk in the hands of the person from whoS acquired, * * * [and] (ii) the stock is not acquired in an exchar ge to which section 351, 354, (continued.

" in connection with the acquisition of the outstanding " On Oct. 12, 2000, SCALP contributed 5,500 shares of Trex Communications (basis $13,160,000, FMVa $62,000) and 72 shares of Paclaco Equities, Inc. (basis $3,768,090, FMV $20,000), to CDGH in a sec. 351 exchange. CDGH did not issue any actual securities in the exchange because, according to the transferee statement required by sec. 1.351-3(b), Income Tax Regs., SCALP owned 100 percent of the stock in CDGH. SCALP also executed a Certificate

ral.--The term "purchase" means any acq isition of stock, but only if-- (i) the basis of the stock in the hands of the purchasing corporat'ion is not detei-mined (I) in whole-or in part by referŠnce to the adjusted basis of such stodk in the hands of the person from whoS acquired, * * * [and] (ii) the stock is not acquired in an exchar ge to which section 351, 354, (continued.

nt to us this basis sfigure. Fortrend entities have-made such representations to us in other transactions. Second, Fortrend has asked us to provide an c opinion that the transfer of the Canadian currency from SCALP to * * * [BCAJ qualified under IRC Section 351. This is the same type of opinion we have rendered in other Fortrend transactions. Third, Fortrend has asked us t·o provide an opinion that * * * [BCA] took a carryover bas-is in the Canadian currency and the dollar amount of the basis *

the transaction as a nontaxable exchange under section 351 in which Mr .

The Section 351 Transaction On September 1, 1997, Mr . Russell received 350 shares of UEC stock and Mr . Kopseng received 650 shares of UEC stock as part o f a transaction qualifyi g as a tax-free exchange under section 351(a) . As part of th section 351 transaction, Mr . Russell made a contribution to UEC f 375 shares of RGCstock, 1,108,056 shares of

Section 351 allows a person to transfer property to a corporation with no recognition of gain or loss, as long as he receives only that corporation’s stock in exchange for the property and, immediately after the exchange, is “in control” of the corporation. Kligfeld received only additional Corporation stock in the exchange, and since he was the so

Petitioner and DII reported that transfer as a nontaxable exchange under section 351, and DII claimed a carryover basis in the transferred partnership interest equal to petitioner' s basis in DIP .

Petitioner and Dll reported that transfer as a nontaxable exchange under section 351, and Dll claimed a carryover basis in the transferred partnership interest equal to petitioner’s basis in dip.

• On November 15, 1999, Kligfeld transferred a 98-percent interest in Holdings 1 to Corporation through a nontaxable section 351 exchange.

351.486.3 (1990). In Starvest U.S., Inc. v. Commissioner, T.C. Memo. 1999-314, this Court held that a dissolved corporation under Florida law continued its corporate existence indefinitely to litigate matters affecting the corporation. In this case, neither party raised objection to the institution of this case by Omnitec to challenge responde

and an equipment purchase installment note and/or payment rights thereto (previously issued in “taxable sale”-leaseback transactions either to the Iowa Tribe’s partnership or another partnership in which the Iowa Tribe’s partnership held an interest) were transferred to the respective lease strip deal’s ultimate beneficiary/customer in a purported section 351 transaction.

351; Fin Hay Realty Co. v. United States, 398 F.2d 694 (3d Cir. 1968). In particular, the undercapitalization of the corporation, petitioner’s control over the corporation, the fact that no dividends were declared, and the lack of loan documents satisfy the Court that there were no bona fide loans. Accordingly, we conclude that the payments ma

- 11 - On September 30, 1993 (through a series of section 351 transfers involving a number of entities related to and controlled generally by Wolf and through which Atrium ultimately received stock in a corporation related to petitioner),6 Atrium transferred to petitioner Atrium’s remaining interests and obligations relating to the underlying Brussels Leaseback, the Atrium Sublease, and the Trust

Although section 304(a) is expressly stated to override section 351 in most cases where both are potentially applicable, see sec.

Although section 304(a) is expressly stated to override section 351 in most cases where both are potentially applicable, see sec.

On September 30, 1993 (through a series of section 351 transfers involving a number of entities related to and controlled generally by Wolf and through which Atrium ultimately received stock in a corporation related to petitioner), Atrium transferred to petitioner Atrium’s remaining interests and obligations relating to the underlying Brussels leaseback, the Atrium sublease, and the trust f

echner filed an individual income tax return for 1993, and Stainless filed a corporation income tax return for the fiscal year ended September 30, 1993. Attached to each of those returns was a statement regarding the organization of Stainless in a section 351 exchange. This statement recited that all assets of the sole proprietorship, including “cash accounts and other receivables”, were transferred to Stainless in exchange for its common stock, but that the “only liability assumed was withheld

8-2 C.B. 129.] 10 Sec. 357(c) generally provides that a taxpayer who transfers property to a corporation with liabilities in excess of adjusted basis is considered to have realized a gain. Sec. 357(c)(3)(A) generally provides that, for purposes of a sec. 351 exchange, liabilities in excess of adjusted basis are excluded from consideration if the liability would give rise to a deduction or if it would be considered a distributive share or guaranteed payment under sec. 736(a). Sec. 357(c)(3)(B) pr

ess, a certified public accountant who served Mr. Martin’s business and prepared corporate and individual income tax returns, assisted in attempting to structure the transaction to make it appear that Federal tax consequences would be deferred under section 351. On December 15, 1986, Mr. Martin, Life, FSCA and its parent entered into a three-step transaction where the Primera stock would be contributed to Glen H. Martin and Associates, Inc. (GHMA), in exchange for 2,400 shares of GHMA stock. GHM

learly illustrates this principle." The example provides as follows: A is the single shareholder in X, an electing small business corporation engaged in an activity described in § 465(c)(1). A contributed $50,000 to X in exchange for its stock under § 351. In addition, A borrowed $40,000 for which A assumed personal liability. A then loaned the entire amount to X for use in the activity. * * * At the close of the taxable year (without reduction for any loss of X) A's amount at risk is $90,000 ($

In a transaction to which section 351 is applicable, Mr.

In a transaction to which section 351 is applicable, petitioner transferred property to the corporation in 1991 consisting of $10,000 cash, an airplane with a zero basis, a Ford 2The insurance companies are Farmers Insurance Exchange, Truck Insurance Exchange, Fire Insurance Exchange, Mid-Century Insurance Co., Farmers' Texas County Mutual Insurance Co., and Farmers New Wor

illustrates this principle.” The example provides as follows: A is the single shareholder in X, an electing small business corporation engaged in an activity described in section 465(c)(1). A contributed $50,000 to X in exchange for its stock under section 351. In addition, A borrowed $40,000 for which A assumed personal liability. A then loaned the entire amount to X for use in the activity. * * * At the close of the taxable year (without reduction for any loss of X) A’s amount at risk is $90,

ridan & Hoover, Lawton 12/01/83 212,845 1/24/89 155,000 63,798 5.0 6302-04 Cache Rd., Lawton 11/01/77 282,488 10/25/88 250,000 82,164 11.5 38th & Lee (lots), Lawton 1/01/86 23,250 5/01/86 30,687 3-0- 0.5 1Date of incorporation. Cost basis represents sec. 351 transfer from majority shareholder. 2Property was owned by petitioner as of Dec. 31, 1994. 3Undeveloped land. The following is a brief description of Mr. McKelvey's and petitioner's activity with respect to each of the above properties. - 5

The parties have stipulated that petitioner recognized no gain or loss upon the transaction whereby its glass business was transferred to LOF Glass, Inc., pursuant to the provisions of - 5 - section 351 or sections 354, 355, and 368(a)(1)(D) (except as required by such sections or section 357(c)), and that pursuant to section 355 neither petitioner nor Pilkington Holdings recognized any gain or loss upon the exchange of LOF Glass, Inc., shares for the LOF shares.

Section 351 Transfers . . . . . . . . . . . . . . . . 54 VIII. California and New Jersey Expansion . . . . . . . . . 59 A. California . . . . . . . . . . . . . . . . . . . . 59 B. New Jersey . . . . . . . . . . . . . . . . . . . . 60 C. C&L Advice . . . . . . . . . . . . . . . . . . . . 61 IX. Dividends . . . . . . . . . . . . . . . . . . . . . . 6

When Senter Associates incorporated and formed petitioner in a section 351 transaction, in which no gain was recognized, the basis of the Burke Building was carried over to petitioner from the prior partnership.

154 (1957) (clear reflection of income trumps nonrecognition under section 351, whereas section 351 generally trumps assignment of income, Rev.

154 (1957) (clear reflection of income trumps nonrecognition under section 351, whereas section 351 generally trumps assignment of income, Rev.

The Capitalization Agreement further states that: (1) The parties understand that it is to their mutual benefit that Balmac acquire title to the entire 86-acre Escondido property to enable Balmac to conclude arrangements to borrow $1,100,.000 from First Commercial Bank; (2) the parties intend to effect a section 351 tax free capitalization; and (3) the tax base on the 44.25 acres is a carryover basis.

We found that Senter Associates (Senter), a partnership, incorporated and formed petitioner, contributing all Senter's assets in a section 351 transaction in which no gain was recognized, and that the basis of the Burke property was carried over to petitioner from Senter.

Section 351 Transfers . . . . . . . . . . . . . . . . 54 VIII. California and New Jersey Expansion . . . . . . . . . 59 A. California . . . . . . . . . . . . . . . . . . . . 59 B. New Jersey . . . . . . . . . . . . . . . . . . . . 60 C. C&L Advice . . . . . . . . . . . . . . . . . . . . 61 IX. Dividends . . . . . . . . . . . . . . . . . . . . . . 6

Section 351 Transfers . . . . . . . . . . . . . . . . 54 VIII. California and New Jersey Expansion . . . . . . . . . 59 A. California . . . . . . . . . . . . . . . . . . . . 59 B. New Jersey . . . . . . . . . . . . . . . . . . . . 60 C. C&L Advice . . . . . . . . . . . . . . . . . . . . 61 IX. Dividends . . . . . . . . . . . . . . . . . . . . . . 6

Section 351 Transfers . . . . . . . . . . . . . . . . 54 VIII. California and New Jersey Expansion . . . . . . . . . 59 A. California . . . . . . . . . . . . . . . . . . . . 59 B. New Jersey . . . . . . . . . . . . . . . . . . . . 60 C. C&L Advice . . . . . . . . . . . . . . . . . . . . 61 IX. Dividends . . . . . . . . . . . . . . . . . . . . . . 6

The assets were transferred under section 351, and the stock of GRS was issued in the name of Kolonaki.

The assets were transferred under section 351, and the stock of GRS was issued in the name of Kolonaki.

The assets were transferred under section 351, and the stock of GRS was issued in the name of Kolonaki.