Final answer:
The claim is false, as under Section 351 of the Internal Revenue Code, no gain or loss is recognized if property is exchanged for corporate stock and the transferors are in control of the corporation after the exchange.
Step-by-step explanation:
The statement that a corporation recognizes gain or loss realized on the transfer of property in exchange for its stock in a §351 transfer is false. Under Section 351 of the Internal Revenue Code, no gain or loss is recognized if property is transferred to a corporation by one or more persons solely in exchange for stock in such corporation and immediately after the exchange such person or persons are in control of the corporation. This scenario is commonly referred to as a §351 transaction or exchange. This provision encourages the formation of corporations by deferring tax consequences of contributing property in return for corporate stock. There are, however, various conditions and limitations that must be adhered to for this non-recognition treatment to apply.