A shareholder transfers a building subject to a mortgage in a Sec.351 transfer.The corporation assumes the mortgage,and no gain is recognized on the transfer under Sec.351.The transfer of the liabilities has no effect on the shareholder's stock basis.

Question

Quizplus · Accepted Answer

The transfer of liabilities, such as a mortgage, to a corporation in a Sec. 351 transfer reduces the shareholder's stock basis by the amount of the liabilities assumed by the corporation.

A Shareholder Transfers a Building Subject to a Mortgage in a Sec.351