C Corporation Formation and Section 351
Learn the decision pattern the exam can test, then apply it to a realistic taxpayer fact pattern.
What changes the answer?
Services are not property for Section 351 control and recognition analysis.
A tax-practice scenario
Founders transfer cash, appreciated equipment, and services for stock while the corporation assumes liabilities. Test each transferor separately.
Identify the taxpayer, entity, transaction, and tax period first. Write the controlling tests in order, apply only the relevant facts, and keep the reporting result separate from any planning recommendation.
Do not take this shortcut.
Checking only aggregate ownership and ignoring service stock or boot.
Turn the rule into recall.
Build a transferor table for property basis, value, stock, boot, liabilities, control, and recognized gain.
- ExplainState the governing distinction without notes.
- ApplyChange one fact in the scenario and predict the new result.
- RetrieveAnswer an unseen question, then review every option.
Official source and scope
This lesson follows the current PSI content outline and uses the IRS reference below for the underlying tax or practice framework. Always confirm current forms, instructions, thresholds, and effective dates before advising a taxpayer.