Question: The IRS Code section 351 addresses property issues in a corporation. According to this section, transfer to a corporation is controlled by the transferor. The

The IRS Code section 351 addresses property issues in a corporation. According to this section, transfer to a corporation is controlled by the transferor. The transferee corporation takes a basis in the property equal to that of the transferor/shareholder, who, in turn, takes an equal basis in the stock received in exchange.

Discuss whether this transaction can provide opportunities for the duplication of losses. Why or why not? Support your response.
If the transferee corporation were to declare bankruptcy, would section 351 still apply? Why or why not? Justify your answer.

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