§ 351(a)

no gain or loss recognized

UNDECIDED

0 of 7 settled

  1. 1

    § 351(a)

    ALL OF
    “property is transferred to a corporation by one or more persons”
    “solely in exchange for stock in such corporation”

    Other property or money: see § 351(b)

    “immediately after the exchange such person or persons are in control (as defined in section 368(c)) of the corporation”

    Step 2 control UNDECIDED

    UNLESS Step 3 a transfer to an investment company, so § 351 does not apply UNDECIDED

    Research 1
    Research 1
  2. 2

    § 368(c)

    control

    ALL OF
    “the ownership of stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote”
    “at least 80 percent of the total number of shares of all other classes of stock of the corporation”
    Research 1
  3. 3

    Reg. § 1.351-1(c)(1)

    a transfer to an investment company, so § 351 does not apply

    ALL OF
    “A transfer of property after June 30, 1967” Opening words
    “The transfer results, directly or indirectly, in diversification of the transferors' interests” Reg. § 1.351-1(c)(1)(i)

    Step 4 diversification under (c)(5), before the diversified-portfolio rule of (c)(6), which (c)(1) applies UNDECIDED

    “The transferee is (a) a regulated investment company, (b) a real estate investment trust, or (c) a corporation more than 80 percent of the value of whose assets (excluding cash and nonconvertible debt obligations from consideration) are held for investment and are readily marketable stocks or securities, or interests in regulated investment companies or real estate investment trusts” Reg. § 1.351-1(c)(1)(ii)

    Step 6 an investment company transferee UNDECIDED

    NOT“a transfer of stocks and securities will not be treated as resulting in a diversification of the transferors' interests if each transferor transfers a diversified portfolio of stocks and securities” Reg. § 1.351-1(c)(6)(i)

    Applies to all of (c)(5), the plan rule included

    Step 7 the diversified-portfolio rule applies, so the transfer does not result in diversification UNDECIDED

  4. 4

    Reg. § 1.351-1(c)(1)(i)

    diversification under (c)(5), before the diversified-portfolio rule of (c)(6), which (c)(1) applies

    ANY OF
    “A transfer ordinarily results in the diversification of the transferors' interests if two or more persons transfer nonidentical assets to a corporation in the exchange” Reg. § 1.351-1(c)(5)

    “Ordinarily” implies facts and circumstances. Cited by Reg. § 1.351-1(c)(6)(i), Reg. § 1.351-1(c)(7)

    Decided at (c)(5), which also disregards nonidentical assets that together are an insignificant portion of the total value transferred

    Step 5 the transfer ordinarily diversifies: two or more persons transfer nonidentical assets, an insignificant portion disregarded UNDECIDED

    “a transfer is part of a plan to achieve diversification without recognition of gain” Reg. § 1.351-1(c)(5)

    Such as a plan for a later transfer, however delayed, of the assets or the stock received to an investment company in a transaction purporting to qualify for nonrecognition, (c)(5)

  5. 5

    Reg. § 1.351-1(c)(5)

    the transfer ordinarily diversifies: two or more persons transfer nonidentical assets, an insignificant portion disregarded

    ALL OF
    “A transfer ordinarily results in the diversification of the transferors' interests if two or more persons transfer nonidentical assets to a corporation in the exchange”

    “Ordinarily” implies facts and circumstances. Cited by Reg. § 1.351-1(c)(6)(i), Reg. § 1.351-1(c)(7)

    NOT“constitute an insignificant portion of the total value of assets transferred”

    Answer for the nonidentical assets, taken in the aggregate: if insignificant, they are disregarded in determining whether diversification has occurred

  6. 6

    Reg. § 1.351-1(c)(1)(ii)

    an investment company transferee

    ANY OF
    “a regulated investment company”
    “a real estate investment trust”
    “a corporation more than 80 percent of the value of whose assets (excluding cash and nonconvertible debt obligations from consideration) are held for investment and are readily marketable stocks or securities, or interests in regulated investment companies or real estate investment trusts”

    The statute's counting rules, § 351(e)(1)(A) and (B), list more assets than this 1967 text

  7. 7

    Reg. § 1.351-1(c)(6)(i) Ambiguous

    the diversified-portfolio rule applies, so the transfer does not result in diversification

    ALL OF

    Effective for transfers completed on or after May 2, 1996; an earlier transfer of diversified, nonidentical portfolios may be treated either consistent with this rule or as resulting in diversification, (c)(6)(ii). This gate applies the rule; the text names no condition for the earlier choice

    “each transferor transfers a diversified portfolio of stocks and securities”

    Diversified: the 25 and 50 percent tests of § 368(a)(2)(F)(ii), with Government securities in the denominator only