The transfer of an installment obligation in a transaction qualifying under § 351 is a disposition of the obligation that causes gain to be recognized by the transferor.

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Under § 351 of the Internal Revenue Code, the transfer of property 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 of the corporation, does not require the recognition of gain or loss by the transferor. This includes the transfer of installment obligations, which does not result in immediate gain recognition at the time of the transfer.

The Transfer of an Installment Obligation in a Transaction Qualifying