When a corporation is formed,if the transferors own 80% or more of the corporation immediately after the exchange,then the transaction is,generally,tax-free.

Question

Quizplus · Accepted Answer

The statement is true. According to the tax code section 351, if the transferors own 80% or more of the corporation immediately after the exchange, then the transaction is generally tax-free. This provision is intended to encourage entrepreneurs to incorporate their businesses without incurring tax liabilities.

When a Corporation Is Formed,if the Transferors Own 80% or More