351 Transfer

I heard about a 351 Transfer on a podcast. Something about selling a property into shares of a C corporation to save on taxes. Anyone have any input on the subject?

It’s a nice way to get money into a c-corp if you plan to set up a retirement plan or VEBA. A 1031 exchange is more efficient if tax deferment is the sole concern.

It’s really an exchange. You are exchanging your property for stock in a corporation which you control.

Section 351 does not defer taxes when the corporation sells the property.

Screw that deal!!! The guy on the podcast made it sound like a sweet, tax deferred deal. If I wanted to play the stock market I would.

Sec. 351 is the code section that allows someone to incorporate their business and not pay income taxes because of the incorporation.

I.e., without Sec. 351, you would be exchanging (selling) your business’s assets for stock…

Check with a local CPA or tax attorney for specifics, but in general you can meet the requirements of Sec. 351 if after the exchange you’re in control of the corporation (at least 80% of all classes of stock) and you don’t try to put more debt that assets into corp and you don’t try to sluff off personal debts into the corporation.

In a sense, Sec. 351 is like Sec. 1031 is that it defers recognition of a gain on exchange…