When a corporation is formed,if the sole shareholder receives stock in exchange for property subject to a liability,the shareholder will recognize a gain.

Question

Quizplus · Accepted Answer

In general, when a shareholder exchanges property for stock in a corporation, they do not recognize a gain if the exchange qualifies under IRC Section 351, even if the property is subject to a liability, as long as the liabilities do not exceed the adjusted basis of the property transferred.

When a Corporation Is Formed,if the Sole Shareholder Receives Stock