Question

Compare hte provision for the nonrecognition of gain or loss on contributions to a partnership (i.e., § 721) w ith the similar provision related to corporate formation (i.e., § 351). What are the major differences and similarities?

Answer 1

answer is given below

Step-by-step explanation:

• As a general rule, both Sections 721 and 351 do not realize any gain or loss after a property loss or loss is recognized. How 351 applies as soon as it is exchanged, but 721 does not require regulation.
• Second 721 applies not only to the spread of p but also to the initial transfer of all contributions from any partner.
• Under Sec 721, the subscriber must obtain interest for the Pip, and under Section 351 the calf and the transferee must acquire stock in the corporation.
• Under both, if there are money or other considerations in the transfer of property, the transaction is considered a sale or exchange rather than a tax-free transfer.