M Corporation assumes a $200 liability attached to property transferred to it by Jane in a section 351 transaction. In all cases, the assumed liability will be treated as boot received by Jane.
A liability assumed by a corporation in a section 351 transaction is only treated as boot if the liability is assumed for tax avoidance purposes.

Question

Quizplus · Accepted Answer

The statement is incorrect as the assumption of a liability in a section 351 transaction is treated as boot regardless of the reasons for the assumption.

M Corporation Assumes a $200 Liability Attached to Property Transferred