C corp — §351 boot & E&P distributions

What this does

How to read it Visual: waterfall and composition bars for the distribution stack.

Two classic C corp pictures: §351 formation (boot & stock basis) and an E&P distribution waterfall (dividend → return of capital → capital gain).

Visual: waterfall and composition bars for the distribution stack.

§351 formation sketch

AB of property transferred FMV of property Boot (cash) received Control (§368(c) 80%) satisfied?

Gain realized

—

Gain recognized

—

Stock basis

—

Distribution: E&P vs basis

Cash distribution Current + accumulated E&P Shareholder stock basis

E&P distribution stack

§351 · realized vs recognized vs stock basis

Exam trap: §351 gain recognized is the lesser of realized gain or boot. No control ⇒ no §351 nonrecognition. Distributions: dividend to extent of E&P, then tax-free return of capital to basis, then capital gain.

← All widgets Diagnostic home

Study tool only — not official IRS software. Figures labeled 2025 track law/forms through Dec 31, 2025. Confirm against current IRS pubs before the exam.