Does the receipt of securities in exchange for the transfer of appreciated property to a controlled corporation cause recognition of gain? Explain.

Answer: Yes, for the reason being that securities do constitute boot under § 351.

Explanation:

§ 351 focuses on transfer of properties to controlled corporations. The property is transfered in exchange for stock. There is at least 80% control of corporation by those who transfer propert which means that classes of stock entitled to vote consist of 80% of total combined voting power. The property of purposes include: propriety processes, installment notes, Equipment and plant, unrecognized receivables of cash basis cash payey. For the purpose of property in § 351, it is also important to note that services are not property. Securities receipt in exchange for the transfer of a property that is appreciated to a controlled corporation results in recognition of gain. When a transfer or receives cash as boot in the exchange, gain is realized, that is, gain is recognized the the extent of the boot received. Securities are treated as boots therefore gain is recognized. For a nature of a gain to be recognized, there must be reference to the type of asset transferred.