In determining whether § 357(c) applies, assess whether the liabilities involved exceed the bases of all assets a shareholder transfers to the corporation.

Question

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Section 357(c) of the Internal Revenue Code applies if the liabilities assumed by the corporation exceed the adjusted basis of the assets transferred by the shareholder to the corporation, potentially resulting in recognized gain to the shareholder.

In Determining Whether § 357(c) Applies, Assess Whether the Liabilities