If a shareholder transfers liabilities to a corporation in a Sec. 351 transfer, there is no effect on the corporation's stock basis due to the corporation's assumption of liabilities.

Question

Quizplus · Accepted Answer

In a Sec. 351 transfer, the corporation's assumption of liabilities generally reduces the shareholder's stock basis, as the liabilities are treated as money received by the shareholder.

If a Shareholder Transfers Liabilities to a Corporation in a Sec