Because services are not considered property under § 351, a taxpayer must report as income the fair market value of stock received for such services.

Question

Quizplus · Accepted Answer

Under § 351 of the Internal Revenue Code, the transfer of property to a corporation in exchange for its stock is generally not a taxable event if the transferor(s) control the corporation immediately after the exchange. However, services are not considered "property" under this section, so if a taxpayer receives stock in exchange for services rendered to the corporation, the fair market value of the stock is considered compensation for the services and must be reported as income.

Because Services Are Not Considered Property Under § 351, a Taxpayer