The reason for § 351 (which permits transfers to controlled corporations to be tax free)can be justified under the wherewithal to pay concept.

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The wherewithal to pay concept refers to the idea that income should only be taxed when the taxpayer has the means to pay the tax. Section 351 allows for tax-free transfers to controlled corporations because the transfer does not result in a realization of income that could be used to pay the tax. Therefore, the provision is consistent with the wherewithal to pay concept.

The Reason for § 351 (Which Permits Transfers to Controlled