What is holding period for 351 exchange?

What is holding period for 351 exchange?

The shareholder’s holding period for stock received in an exchange depends on the shareholder’s holding period for the property transferred to the corporation in exchange for the stock. The holding period for stock received in a Section 351 exchange includes the period the taxpayer held the property transferred.

What happens if section 351 is not satisfied?

Courts have held that the control requirement of § 351 is not satisfied where, pursuant to a binding agreement entered into by the transferor prior to the transfer of property to the corporation in exchange for stock, the transferor loses control of the corporation by a taxable sale of all or part of that stock to a …

What is a tacked holding period?

In determining the holding period for long-term capital gain and loss purposes, the holding period is “tacked on” to another person’s holding period in the case of gifts or property received in a divorce. Additional rules when business assets are distributed to owners or partners may also apply.

What is a 351 transaction?

351 allows a tax-free incorporation transfer if certain requirements are met, including that the property must be transferred to a corporation by one or more persons in exchange for stock in the corporation, and, immediately after the exchange, the transferor(s) is (are) in control (as defined in Sec.

What is considered property under section 351?

Property for purposes of section 351 includes “secret processes and for- mulas,” and any other secret information pertaining to processes in the general nature of a patentable invention, without regard to whether a patent has been applied for or whether the information is patentable.

Does section 351 include cash?

Additionally, Cash Is considered property for purposes of Section 351. Additionally, Securities are considered property for purposes of IRC §351.

What is property for purposes of section 351?

What is the holding period for gifted property?

Gifts — Your holding period includes the time the person who gave you the shares held them. However, your basis might be the fair market value at the date of the gift. If so, your holding period of the gifted stock will begin the day after you received the gift.

What is minimum holding period?

Meeting the minimum holding period is the primary requirement for dividends to be designated as qualified. For common stock, the holding must exceed 60 days throughout the 120-day period, which begins 60 days before the ex-dividend date.

What is the definition of control for purposes of section 351?

See Multiple Transferors in a Section 351 Transfer. Control means ownership of at least 80 percent of all classes of the corporation’s stock and at least 80 percent of the total voting power of all classes of stock.

What does property include for purpose of 351?

The definition of property for §351 purposes is very broad and includes tangible and intangible assets (e.g., company name, patents, customer lists, trademarks, and logos).

Does section 351 apply to LLC?

Section 351(e)(1) provides that section 351 will not apply to transfers of property to an investment company. Accordingly, LLC is not an investment company under section 351(e)(1).

When is a gain or loss recognized under Section 351?

Under Section 351(a), no gain or loss is recognized by a transferor of property to a corporation in exchange solely for common stock and certain types of preferred stock if the transferors are in control of the transferee corporation (within the meaning of Section 368(c)) immediately after the transfer.

When does a transfer require Internal Revenue code § 351?

requirement of § 351 of the Internal Revenue Code if, pursuant to a binding agreement entered into by the transferor with a third party prior to the exchange, the transferor transfers the stock of the first corporation to another corporation (the “second corporation”) simultaneously with the transfer of assets by the third party to the second

What’s the difference between Section 351 and Section 721?

November 8 and 9, 2007 Many practitioners think of Section 351,1 which applies to transfers of property to entities taxable as corporations, and Section 721, which applies to transfers of property to entities taxable as partnerships, as more or less identical provisions that produce substantially

What does 26 U.S.Code § 351 mean?

26 U.S. Code § 351 – Transfer to corporation controlled by transferor