If a Shareholder Transfers Liabilities to a Corporation in a Sec

question 124

True/False

If a shareholder transfers liabilities to a corporation in a Sec. 351 transfer, there is no effect on the corporation's stock basis due to the corporation's assumption of liabilities.

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Definitions:

Strategic Investment

An investment made by a company to build a lasting interest in a related company to help further business objectives.

Significant Influence Investments

Investments in which the investor has the power to participate in the financial and operating policy decisions of the investee but does not control or jointly control them.

Joint Control

A situation in an agreement where two or more parties have control over a business activity, requiring unanimous consent for decision-making.

Significant Influence

The power to participate in the financial and operating policy decisions of an investee, but not control them.