Transfers of Property to a Corporation – IRC Sec. 351

TaxConnections Picture - Home - OfficeAccording to IRC 1001 you generally recognize a gain or a loss when you sell or dispose of property. However, there are a number of exceptions, specifically transfers of property to a corporation.

For example under IRC 351a no gain or loss is recognized if property is transferred to a corporation in exchange for stock in the corporation if immediately after the exchange the person transferring the property in question is in control of the corporation that received ownership of the property.

The intent of IRC 351 I believe is to apply when there is simply a change in the form of ownership of the property in question and you have not really profited or cashed out a loosing investment, which it turns out is a reasonable rule of thumb to use in making a determination as to whether a gain or loss is recognizable upon transfer.

The majority of the nonrecognition transfers of property I have been involved with to date have generally taken place in conjunction with forming a new corporation but these tax code sections also apply to transfers of property made to existing corporations.


I am enrolled with the United States Treasury Department to practice before the IRS, governed by rules stipulated in United States Treasury Circular 230. As a Federally Authorized Tax Practitioner and a tax appeals specialist my Enrolled Agent License #85353 is issued by the United States Treasury. With this license I work for U.S. taxpayers everywhere to resolve tax matters and de-escalate stress about taxes or tax disputes for individuals and corporations with federal and state issues.

Facebook Twitter LinkedIn 

Meet Tax Experts At TaxConnections...