Final answer:
The statement is false because in a Section 351 exchange, no loss recognition is allowed, even if boot is received. Nan cannot recognize any part of the loss realized on the exchange.
Step-by-step explanation:
The statement is false. In a Section 351 exchange, a taxpayer transfers property to a corporation in exchange for stock, and if structured properly, the exchange is generally tax-free. However, if the taxpayer receives other property or cash (known as "boot") in addition to the stock, the taxpayer must recognize gain to the extent of the lesser of the boot received or the gain realized on the exchange. In the case of a loss, under Section 351, no loss recognition is allowed, even if boot is received. Therefore, Nan cannot recognize any part of the $2,000 loss realized, even though she received $500 of boot.