Why Would a Transferor Want to Avoid the Nonrecognition of Gain

question 43

Essay

Why would a transferor want to avoid the nonrecognition of gain under Sec. 351? How can the nonrecognition provision of Sec. 351 be avoided?

---

Definitions:

Profit and Loss Statement

A financial document summarizing the revenues, costs, and expenses incurred during a specific period, typically a fiscal quarter or year.

Income Statement

A financial document that reports a company’s revenues, expenses, and profits over a specific period.

Statement of Changes

A financial document detailing how an entity's equity has changed over a period of time due to various business activities.

Cash Flows

The total amount of money being transferred into and out of a business, especially as affecting liquidity.