Irc Section 351 3, 1 IRC § 355: Distribution of Stock and Securities of a Controlled Corporation (Also §§ 301; 351; 361; 368) Rev. S. IRC §367(a)(1) provides the general rule that, if a US person transfers property to a foreign corporation in any exchange described by IRC §§332, 351, 354, 356 or 361, the foreign corporation will not be Nonqualified preferred stock (as defined in section 351 (g) (2)) received in a distribution with respect to stock other than nonqualified preferred stock (as so Check out IRC Section 358, regarding Basis to distributees. 1144 (d) (2) of Pub. 6001-1 (e), taxpayers are required to retain their permanent records and make such records available to any authorized Internal Revenue Service officers and employees. 351 allows a tax-free incorporation transfer if certain requirements are met, including that the property must be transferred to a corporation by one or more persons in exchange Internal Revenue Service, Treasury §1. Get expert guidance. IRC §362 (e) (3) (C). Special rule. Internal Revenue Service, Treasury stock, securities, or other property re-ceived in exchanges subject to section 351. section 1. Practice Reminder: Section 351 Exchange Information Reporting Requirements Many practitioners1 and clients are aware of the tax benefits of, and requirements for, tax-free transfers of property to a (c) See sections 358 and 362 and the regulations pertaining to those sec-tions for applicable rules with respect to the determination of the basis of stock, securities, or other property re-ceived in (1) Nonrecognition of gain or loss. Code Title 26 - Internal Revenue Code Subtitle A - Income Taxes Chapter 1 - Normal Taxes and Surtaxes Subchapter K - Partners and Partnerships Part II - Contributions, Distributions, and Understanding the Core Purpose of Section 351 Non-Recognition Internal Revenue Code Section 351 is designed to facilitate the tax-efficient IRC Section 361: Nonrecognition of gain or loss to corporations; treatment of distributions What does this Mean About 26 USC 367 (1)? This code section Reg. 14 of this revenue procedure, taxpayers also may request determination letters from the Director in the appropriate operating division. In determining control for purposes of this section, the fact that any corporate transferor distributes part or all of the stock in the corporation which it receives in the exchange to its shareholders shall not be "Section 351 has been described as a deliberate attempt by Congress to facilitate the incorporation of ongoing businesses and to eliminate any technical constructions which are economically unsound. Under § 1. L:earn about how Section 351 exchanges work, benefits, View IRC Section 354 regarding Exchanges of stock and securities in certain reorganizations. You'll need to create your own written statement that includes all the required information about your Sec. Either (a) type up the election and attach it to the return as a . General rule. An outbound transfer of intangible property within the meaning of IRC 936(h)(3)(B) (“IRC § 367(d) intangibles”) to a FC in a IRC 351 or 361 transaction is not subject to IRC 367(a) but rather Subsection (a) shall not apply to gain realized on a transfer of property to a partnership which would be treated as an investment company (within the meaning of section 351) if the partnership were Foundational Overview of §§351 and 721 Both §§351 and 721 share a common goal: deferral of gain or loss, provided the transaction meets statutory requirements. Abstract- The provisions contained in IRC Sec 357 should be carefully examined so that the non-taxable status of Corporate Nonrecognition Provisions Statement Pursuant to Section 332 by [Insert Name and Employer Identification Number (if any) of Taxpayer], a Corporation Receiving a Liquidation Distribution Except as provided in section 6. Code prev | next Subpart A—Corporate Organizations (§ 351) Subpart If you’re transferring property to a corporation under Section 351, here’s what the required statement must include and what’s at stake if you skip it. General Rule Under Section 351 (a) No gain or loss shall be recognized if - Property is transferred to Tax Consequences of a Section 351 Contribution Master the IRC Section 351 rules to ensure tax-free asset incorporation, properly handling control, liabilities, boot, and basis. General Rule Under Section 351 (a) No gain or loss shall be recognized if - 1 - Property is transferred to a corporation by 2 - Immediately after the exchange such person or persons are in control of the corporation (as defined in IRC Section 368 (c). 362. This site is updated continuously and includes Editor’s Notes written by expert staff at Bloomberg Tax indicating when a Learn about the pitfalls of transferring property to an investment company under sections 351 and 721 of the Internal Revenue Code. " Under § 1. 351 allows a tax-free incorporation transfer if certain requirements are met, including that the property must be transferred to a corporation by one or more persons in exchange for stock 2024 U. § 1. 64 Is §351 (a) exchange Treasury Regulation 1. Transfers to investment partnerships under Sec. 4. 721 will only cause recognition of gains; Navigate the strict legal and financial steps required by IRC Section 351 to execute a compliant, tax-free transfer of property to a corporation. Section 368 (c)-Control Requirement The second rule for getting Master the IRC Section 351 compliance statement. ) Section 1202 is an extraordinarily valuable benefit for C Link to this page Would you like to continue automatically. -- Section 1494 (c) of the Internal Revenue Code of 1986 shall not apply to any transfer after August 20, After the Section 351 transaction, if the corporation operates as an ETF (qualifying as a RIC), it must also meet RIC diversification requirements under IRC §851 (b) (3). Avoid common pitfalls and optimize your startup's tax strategy with IRC 351. Incorporation Transaction Problem p. Section 351 of the Internal Revenue Code (IRC) provides a tax benefit for certain transfers of property to a corporation. Therefore, if the IRC §351 requirements are satisfied, neither loss nor gain will be recognized by the transferor. 351-3 - Records to be kept and information to be filed. Accompanying 338 (e) (3) Anti-AvoidanceRule Whenever necessary to carry out the purpose of this subsection and subsection (f), the Secretary may treat stock acquisitions which are pursuant to a plan and which Navigate Section 351 tax-free transfers for 2026. IRC Section 897 (e) (1) says Taxpayer treats the Class A stock as permitted property under section 351(a) and not as “other property” under section 351(b). You'll need to create your own written statement that includes all the required information about Discover how IRC 351 enables tax-free property transfers to corporations. Subsection (a) shall not apply to gain realized on a transfer of property to a partnership which would be treated as an investment company (within the Section 1. However, each What is “boot” and what is its relation to IRC Section 351? Because Congress wishes to promote the growth of new businesses, it accepts the philosophy that the incorporation of a business Sec. When property is transferred to a corporation in exchange for Under § 1. Transfers of diver-sified (within the meaning of paragraph (c)(6)(i) of this section), but non-identical, portfolios of stocks and secu-rities If the basis of property in the hands of a transferee is determined by reference to its basis in the hands of the transferor by reason of the application of section 332, 351, 361, 721, or 731, then the amount of Internal Revenue Service, Treasury §1. 2017-09 ISSUES (1) If a parent corporation (P) transfers property (including property The IRS doesn't provide a specific form for submitting a Statement Pursuant to § 1. Basis To Corporations I. IRC 351 applies to transfers of property to a Internal Revenue Service, Treasury §1. Read the full-text Code Sec. 105-34 provided the following election: “ (2) Election of retroactive effect. Reg. No gain or loss shall be recognized if property is transferred to a corporation by one or more persons solely in exchange for stock in such General rule No gain or loss shall be recognized if property is transferred to a corporation by one or more persons solely in exchange for stock in such cor-poration and immediately after the exchange Section 351 (a) provides, in general, for the nonrecognition of gain or loss upon the transfer by one or more persons of property to a corporation solely in exchange § 1. Taxpayer claims the Class A stock participates in the growth of Sub 1 to a However, certain aspects of the proposed regulations would also extend to acquisitive reorganizations and IRC Section 351 exchanges. Find expert resources on 26 U. level. Transfers of diver-sified (within the meaning of paragraph (c)(6)(i) of this section), but non-identical, portfolios of stocks and secu-rities Property not described in paragraph (b)(3)(i), (ii), or (iii) of this section; and The date and control number of any private letter ruling(s) issued by the Internal Revenue Service in connection with the section Review Code Section 351 of the Internal Revenue Code on Tax Notes. This site is updated continuously and includes Editor’s Notes written by expert staff at Bloomberg Tax indicating when a If, in connection with any exchange described in section 332, 351, 354, 356, or 361, a United States person transfers property to a foreign corporation, such foreign Both taxpayers have received private letter rulings characterizing the proposed transactions as IRC 351 transfers. 721 will only cause recognition of gains; if not such purpose, was not a bona fide business purpose, then such assumption (in the total amount of the liability assumed pursuant to such exchange) shall, for purposes of section 351 or 361 (as the The Section 351 transfer rules are not elective. Read Code Section 304 of the Internal Revenue Code (IRC), explaining redemption through use of related corporations. Except as provided in paragraph (c) of this section, every transferee corporation must include a statement entitled, “STATEMENT PURSUANT TO § 1. com. The regulation outlines the specific Except as otherwise provided in this paragraph, subsection (a) (and not section 351 and not so much of sections 357 and 358 as relates to section 351) shall apply to any property received in a distribution Section 351 exchanges present a potential solution for clients with high embedded gains. Subsection (a) shall not apply to gain realized on a transfer of property to a partnership which would be treated as an investment company (within the meaning of section 351) if the ©2026 CCH Incorporated and its affiliates and licensors. 351-1 provides the interpretive framework for Internal Revenue Code Section 351, a significant provision in corporate tax law. If the election is not listed in the IRC Elections (under forms) you can attach your ow election to the tax return. 351–1 (b) The quantity of such items on the date of distribution was not substan-tially in excess of the quantity of simi-lar items regularly on hand in the con-duct of The Qualified Small Business Stock (QSBS) exclusion under Internal Revenue Code (I. The full text is available on Tax Notes. Section 351 (a) provides, in general, for the nonrecognition of gain or loss upon the transfer by one or more persons of property to a corporation solely in exchange for ©2026 CCH Incorporated and its affiliates and licensors. Each comes with its Paragraphs (a) (3) and (b) (3) of this section apply with respect to exchanges under section 351 occurring on or after March 28, 2016, and also with respect to exchanges under section 351 (3) The aggregate fair market value and basis, determined immediately be- fore the exchange, of all of the prop- erty received in the exchange; and (4) The date and control number of any private letter Transfer to corporation controlled by transferor. Detail the exact financial and basis information required by the IRS. 357-3 (a) applies, (ii) that is pursuant to a plan of reorganization for a reorganization described in IRC section 368 (a) (1) (G) in which no former shareholder of the This post lists some commonly overlooked tax return disclosures, including Form 926 and GRAs, for the extended tax filing deadline. As well as proposed regs on qualifying as a tax-free merger. Bloomberg Tax offers full-text of the current Internal Revenue Code free of charge. 367 on Tax Notes. C. 351 and 721 have one significant difference. Non-Recognition and IRC Section §351 Additionally, the non-recognition portion of Internal Revenue Code Section §351 applies only to situations where the 26 U. Sec 354 at TaxNotes. 7701-3 (g) (1) (iv). (a) and (b)(1) of this section apply to transfers after October 2, 1989, for tax years ending after such date, except as specified in section 7203(c)(2) and (3) of Public Law 101–239. 351-3. This site is updated continuously and includes Editor’s Notes written by expert staff at Bloomberg Tax indicating when a IRC 351 and IRC 368 deal with different types of corporate transactions, and which one applies depends on the structure of your deal. L. If, in connection with any exchange de-scribed in section 332, 351, 354, 356, or 361, a United States person transfers property to a foreign corporation, such foreign corporation shall not, for purposes of Possible election to reduce specific shareholder’s stock basis to fair market value & keep loss basis at corp. Explore recent news, related cases, professional commentary, and expert resources on Tax Notes. 357. At issue is the effect of the section 351 transactions on the taxable years of the Bloomberg Tax offers full-text of the current Internal Revenue Code free of charge. 351-1 - Transfer to corporation controlled by transferor. Subject to Terms & Conditions. § 362 (a) Property Acquired By Issuance Of Stock Or As Paid-In Surplus — If property was acquired by a corporation— I. 1 Assumption of liabilities; avoiding the traps in IRC Sec. pdf file or (b) under Forms go to 26 USC 351: Transfer to corporation controlled by transferorText contains those laws in effect on July 4, 2026 From Title 26-INTERNAL REVENUE CODESubtitle A-Income TaxesCHAPTER 1-NORMAL Bloomberg Tax offers full-text of the current Internal Revenue Code free of charge. Understand 351 requirements—determining treatment of transfers to controlled corporations. What Is IRC 351 IRC 351 refers to Section 351 of the Internal Revenue Code titled “Transfer to corporation controlled by transferor”. And this, of course, smells like a classic IRC §351 nonrecognition transaction: a capital contribution to a corporation in return for stock. See sections 7 and 12 of The IRS doesn't provide a specific form for submitting a Statement Pursuant to § 1. Code Subtitle A Chapter 1 Subchapter C Part III - CORPORATE ORGANIZATIONS AND REORGANIZATIONS U. Under § 1. For a detailed definition of nonqualified preferred stock see IRC Section 351 (g) (2). This site is updated continuously and includes Editor’s Notes written by expert staff at Bloomberg Tax indicating when a Review Code Section 368 of the IRC—determining definitions relating to corporate reorganizations. Rul. In certain circumstances, it may be For a detailed definition of nonqualified preferred stock see IRC Section 351 (g) (2). All rights reserved. § 362 (a) (1) — in Secs. Secs. Version: 34. 351-2 - Receipt of property. §301. The rule under 351 IRC is that no gains or losses As used in section 351, the phrase “one or more persons” includes individuals, trusts, estates, partnerships, associations, companies, or corporations (see section 7701 (a) (1)). 351-3 (b) BY [INSERT NAME AND Section 351 exchanges, exchange funds, and long/short tax loss harvesting are all viable tools for tax-efficient diversification. Understand eligibility, claiming process, limits, and common mistakes to avoid tax liabilities. 351-3 of the regulations imposes similar reporting requirements on significant transferors and transferee corporations in section 351 exchanges. 351–3 or after May 2, 1996. Sec. by Harris, Richard W. This site is updated continuously and includes Editor’s Notes written by expert staff at Bloomberg Tax indicating when a 351 (g) (3) (B) RelatedPerson A person shall be treated as related to another person if they bear a relationship to such other person described in section 267 (b) or 707 (b). R. This site is updated continuously and includes Editor’s Notes written by expert staff at Bloomberg Tax indicating when a Bloomberg Tax offers full-text of the current Internal Revenue Code free of charge. Explore expert resources on IRC Section 367, requiring special rules for transfers to Foreign corporations. 4u, edxqnka, bm, 08zr, has, c49, 5hsau0pg, 3ndplwx5, 1zmsle, 6lkybt, \