The assignment of income doctrine does not apply if the transferor in a Sec. 351 exchange in which no gain is otherwise recognized transfers substantially all the assets and liabilities of the transferor's trade or business to the controlled corporation.

Question

Quizplus · Accepted Answer

The assignment of income doctrine does not apply in this case because the transfer of assets and liabilities is part of a Sec. 351 nonrecognition transaction, and the transferor does not recognize any gain. Additionally, the transfer is of a complete trade or business, which means that there is no income left for the transferor to assign.

The Assignment of Income Doctrine Does Not Apply If the Transferor