As youâve undoubtedly learned by now, you often have to focus onthe details in tax law, and the rules surrounding corporateformation are no exception to this rule. We know that a corporationis generally seen as a separate taxable entity from itsshareholders. As a result, corporate formations, which involvetransfers of property between the shareholders and the corporation,would generally be taxable to both the corporation and theshareholders. Itâs no surprise that this result would oftendiscourage corporate formation. Congress remedied this particularproblem by enacting Section 351, and your text details how thisprovision generally operates. Did Congress craft a provision thatallows corporations and their shareholders to avoid taxation onthese transactions permanently, or did it have something else inmind? Support your answer
As youâve undoubtedly learned by now, you often have to focus onthe details in tax law, and the rules surrounding corporateformation are no exception to this rule. We know that a corporationis generally seen as a separate taxable entity from itsshareholders. As a result, corporate formations, which involvetransfers of property between the shareholders and the corporation,would generally be taxable to both the corporation and theshareholders. Itâs no surprise that this result would oftendiscourage corporate formation. Congress remedied this particularproblem by enacting Section 351, and your text details how thisprovision generally operates. Did Congress craft a provision thatallows corporations and their shareholders to avoid taxation onthese transactions permanently, or did it have something else inmind? Support your answer
