Today our sister website, Tax-Charts.com, published a free flowchart regarding the requirements for a “tax-free” exchange under Code §351. The flowchart includes the three primary requirements under Code §351 (transfer of property, in exchange for stock, and control), as well as the numerous modifications and exceptions these requirements. Some of the specials rules include:
- Stock received from underwriters,
- Stock received for services,
- Property contributed of a relatively small value,
- Post-exchange transfers of stock, and
- Diversification rules for investment companies.
Although the flowchart addresses the assumption of liabilities as potentially being “boot,” it does not address which types of liabilities assumed are treated as boot under Code §357.
The flowchart is available for free here.