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Tax Lawyer, Vol. 57, No. 1 SECTION 357(c) AND THE ELUSIVE BASIS OF THE ISSUER’S NOTE 97 97 SECTION 357(c) AND THE ELUSIVE BASIS OF THE ISSUER’S NOTE Steven Quiring* Section 357(c)1 provides that a shareholder must recognize gain on a section 351 exchange to the extent that the liabilities assumed by the corporation exceed the total adjusted basis of the property transferred.2 Attempts by shareholders to increase their basis, thereby avoiding gain recognition, by transferring their own notes to...

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