In the formation of a corporation under § 351, the shareholder's basis in the stock received is decreased by loss recognized and boot received.

Question

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Under § 351, the shareholder's basis in the stock received is generally the carryover basis of the property transferred to the corporation, increased by any gain recognized by the shareholder on the transfer (not decreased by loss recognized) and any amount treated as a contribution to capital, but decreased by any boot received. Losses are generally not recognized on transfers to controlled corporations under § 351.

In the Formation of a Corporation Under § 351, the Shareholder's