Property-for-Common-Stock Calculator

Investor contributes property (subject to assumed debt) for common stock. FMV & NBV driven · depreciation recapture · §351 80% control test · Taxable vs. §351 side-by-side.

Inputs

About the property
What you're contributing and the tax basis you carry in it.
NBV = Cost − Accumulated Depreciation (the adjusted tax basis).
Treated as “boot” under §357.
§1245: prior depreciation recaptured as ordinary income.
Cash, services & boot optional — leave $0 if none
Extra consideration in the deal. Cash and services you put in add to your stock; boot you receive back can trigger tax.
Cash you put into the corporation — adds to your stock basis and counts toward the 80% control test.
Stock taken for services is ordinary income at this FMV (not boot). A services-only contributor isn't counted in the 80% property group.
Money or property you receive back — triggers recognized gain up to its FMV (§351(b)).
Shares & ownership drives the §351 80% test
How many shares you receive and how much of the company you'll own afterward — this is what decides whether §351 deferral applies.
Spread above par posts to APIC.
§351 control = (group’s shares + new shares) ÷ total post-deal ≥ 80%.
Shares issued to other shareholders who also contribute property in the same transaction — they count toward the 80% group. (A services-only holder does not.)
Tax rates only if gain is taxed now
Used only to estimate the tax bill when some gain is recognized. If the deal is fully deferred under §351, tax due now is $0 regardless of these.
23.8% = 20% capital-gains rate + 3.8% NIIT surtax (top bracket). Lower brackets: 15% or 0% — edit to match.
What is NIIT — and how do you reduce it?

NIIT (Net Investment Income Tax) is a 3.8% federal surtax on investment income — capital gains, dividends, interest, and rent. It kicks in only if your modified adjusted gross income tops $200,000 (single) or $250,000 (married filing jointly). Below that, NIIT is $0, so your rate is just the 20% / 15% / 0% capital-gains rate.

Common ways to soften the capital-gains / NIIT hit:

  • Qualify for §351 deferral — if no gain is recognized this year, there's nothing to tax now (NIIT included).
  • Installment sale (§453) — spread the gain across multiple years to stay under the income threshold.
  • Harvest capital losses — sell losing positions to offset the gain and lower net investment income.
  • Materially participate — gain from an active trade or business you're truly involved in is generally not subject to NIIT.
  • Lower your MAGI — retirement-plan contributions and other deductions can pull you under the $200k/$250k line.
  • Give appreciated property — donating it (or using a donor-advised fund) avoids recognizing the gain at all.
  • Time it — sell in a lower-income year, and always hold >1 year for the lower long-term rates.

Educational only — not tax advice. Confirm your bracket, NIIT exposure, and any planning move with your CPA.

§1245 recapture → ordinary rate. (§1250 unrecaptured gain ≈ 25%.)
How is recapture calculated? (with your numbers)

§1245 (equipment) recaptures at your full ordinary rate; §1250 (real estate) is ‘unrecaptured §1250 gain’, capped around 25% — switch Property Type above and this rate updates.

Deal Summary

These are computed results — they update automatically from your inputs on the left.
Property FMV
Net Book Value (NBV / basis)
Less: mortgage assumed
Net equity contributed (property)
Plus: cash contributed
Plus: FMV of services
Less: boot received back
Stock value received
Built-in gain (FMV − NBV)
Shares issued to investor
Price / share used
Investor ownership % (post-deal)
§351 control test — contributor group owns post-deal

§351 Analysis — Step by Step

The four questions every property-for-stock transfer must answer, worked through with your numbers — including any cash contributed, services rendered, boot received, and debt assumed.

① Shareholder (you) — your realized gain, what's recognized/taxed now, and your basis in the stock
1

Is a gain or loss realized?

Measure the economics first. Amount realized = everything you receive — the FMV of the stock, plus any cash/boot, plus any debt the corporation assumes (relief from a mortgage is value to you). Subtract your adjusted basis (NBV = cost − accumulated depreciation). The result is realized: it exists economically whether or not it is taxed yet.

2

Is the gain recognized?

Recognized = the part of the realized gain that is taxable now. Under §351(a), if the contributors control ≥80% of the corporation immediately after and receive solely stock, no gain is recognized — it is deferred. Two exceptions force recognition: §351(b) boot — gain is taxed up to any cash or other property received; and §357(c) — if the debt assumed exceeds your basis in the property, that excess is taxed even with no cash. Liabilities are otherwise not boot (§357(a)), and a loss is never recognized under §351.

3

What is the shareholder's stock basis?

Your basis in the stock is a substituted basis (§358): start with your basis in the property, subtract debt relief and any boot, then add back any gain you recognized. This is the mechanism that preserves the deferred gain — a low stock basis means the untaxed gain reappears when you later sell the stock. A realized loss is likewise preserved as a higher stock basis.

② Corporation — its gain (none, §1032) and its carryover basis in the property (§362)
4

What are the corporation's tax consequences?

Two questions for the corporation: (1) does it recognize gain or loss, and (2) what is its basis in the property? On gain, the answer is always no — §1032 says a corporation never has income from issuing its own stock. Its basis is a carryover basis (§362(a)): the greater of your NBV or the debt assumed — equivalently NBV + any gain you recognized. §362(e)(2) caps it at FMV for a net built-in loss.

① Gain or loss recognized by the corporation: $0 — §1032 (it issued its own stock).
② Corporation's basis in the property received:
§1032 — the corporation recognizes no gain or loss whenever it deals in its own stock: (1) Formation — issuing common stock for property or cash; (2) Reacquisition — repurchasing treasury stock; (3) Resale — reselling treasury stock.
Where your gain goes — at a glance

Company Journal Entry (GAAP — asset recorded at FMV)

AccountDebitCredit

Investor Tax Outcome — Two Scenarios

APPLIES

Taxable Exchange gain now

Contributor group does not control ≥80% after. Full built-in gain recognized today; stock basis steps up to FMV.

Amount realized (stock + debt relief)
Less: adjusted basis (NBV)
Gain recognized
↳ recapture @ ordinary
↳ capital gain @ cap rate
Est. tax due
Investor’s basis in stock
Gain deferred
APPLIES

§351 Tax-Deferred deferral

Contributor group controls ≥80% after. Gain recognized only to the extent mortgage > NBV (§357(c)); rest carries over.

Built-in gain
Mortgage assumed
Gain recognized (§357(c) excess)
↳ recapture @ ordinary
↳ capital gain @ cap rate
Est. tax due
Investor’s basis in stock
Gain deferred

Reacquisition — repurchase / redemption (§302 · §1032)

Inputs
① Shareholder — §302 redemption, step by step
1

Ownership before & after

2

§302 tests

3

Treatment & amount

② Corporation — §1032
1

Gain or loss recognized

$0
§1032 — a corporation recognizes no gain or loss on transactions in its own stock.
2

Journal entry

AccountDebitCredit

Resale — sell treasury stock (§1032)

Inputs
① Shareholder — the buyer
1

Buyer acquires stock

② Corporation — §1032
1

Gain or loss recognized

$0
§1032 — selling treasury above or below cost adjusts paid-in capital, never income.
2

Journal entry

AccountDebitCredit

Nonliquidating Distribution — §301 (shareholder) & §311 (corporation)

A C-corp distributes property to a shareholder. The corporation recognizes gain as if it sold appreciated property at FMV — but losses are not deductible (§311). The shareholder is taxed in three tiers: dividend → return of capital → capital gain (§301).

Property distributed
Enter each asset's FMV and adjusted basis. Leave a row at 0 to ignore it.
AssetFMVAdjusted basis
May be negative (a deficit).
The §311 distribution gain is added on top automatically.
① Shareholder — worked through, step by step (§301)
1

How big is the distribution?

2

How much is a taxable dividend?

3

Return of capital (nontaxable)?

4

Any capital gain?

5

Your basis in the property received

② Corporation — §311
1

Gain or loss on each asset

AssetGain/(loss)Recognized
2

Recognized gain (§311)

Recognized gain:

Corporate Liquidation — §331/§336 (taxable) or §332/§337 (parent-sub)

A corporation distributes all its assets and dissolves. The basis the recipient takes — and whether anyone is taxed — flips on whether it's a taxable liquidation or a tax-free ≥80% parent-subsidiary liquidation. Two layers of tax in a taxable liquidation: the corporation (§336, character split below) and the shareholder (§331 capital gain/loss).

Liquidation type
Assets distributed in liquidation
Tag each asset by type — it drives the ordinary vs. capital character of the §336 gain (inventory is ordinary; equipment §1245 is ordinary up to depreciation recapture, §1231 above). Leave a row at 0 to ignore it.
AssetTypeFMVAdj. basisAccum. dep.
Accum. dep. is used only for §1245/§1250 recapture (how much of an equipment gain is ordinary). Leave 0 for inventory and capital assets.
If >0: those minority holders are taxed under §331, and the subsidiary recognizes gain (not loss) on the share distributed to them.
① Shareholder / Parent
1

Gain or loss recognized

2

Basis in assets received

② Corporation / Subsidiary
1

Gain or loss on each asset

AssetGain/(loss)Recognized
2

Recognized (§336 / §337)

③ Character of the corporation's §336 gain — two buckets: ordinary income vs. capital/§1231
A

Ordinary income / (loss)

Inventory (always ordinary) + equipment §1245 depreciation recapture + any net §1231 losses (§1231 losses are ordinary).
B

Capital / §1231 gain / (loss)

Equipment gain above recapture, §1250 real-property gain, and other capital assets — a net §1231 gain is taxed as long-term capital gain.
④ Shareholder carryforward tracker — §331 is always capital; a capital loss is limited to $3,000/yr against ordinary income
Carryforward
③ On the parent's books — assets received, their carryover basis (§334(b)), and the journal entry
1

Assets received & their basis

AssetFMVCarryover basis (§334(b))
2

Journal entry on the parent's books

AccountDebitCredit

More distribution rules

Constructive dividends

Some payments are recharacterized as dividends to stop a corporation from disguising a dividend as a deductible payment. The corporation loses the deduction and the shareholder has dividend income (to the extent of E&P). Common examples:

  • Excessive salaries paid to shareholder-employees
  • Bargain sales — selling corporate assets to a shareholder below FMV
  • Shareholder personal use of corporate property
  • Below-market loans to shareholders

Stock dividends — basis allocation

A distribution of the corporation's own stock is generally not taxable — unless the shareholder could elect cash or other property. The original basis is spread across the old + new shares.

These are character rules for a shareholder's loss or gain when they dispose of stock — by selling it, it becoming worthless, or receiving it back in a liquidation (§331). They sit on top of the gain/loss you compute elsewhere: §1244 converts a capital loss to an ordinary loss; §1202 excludes a QSBS gain.

§1244 Small Business Stock — ordinary loss

An original shareholder (individual or partnership) who sells §1244 small-business-corporation stock at a loss — or whose stock becomes worthless — may treat up to $50,000 ($100,000 MFJ) as an ordinary loss; any excess is a capital loss, deductible against ordinary income only $3,000/yr ($1,500 MFS) with the rest carried forward. Gains on §1244 stock are normal capital gains.

In a complete liquidation, this is the cash / FMV received as full payment for your stock — the corporation also recognizes §336 gain/loss on those assets (a second layer of tax; see the Liquidation panel).
1

Your total loss

2

Ordinary vs. capital

3

How much can you deduct this year?

Carryforward

§1202 QSBS — gain exclusion

A noncorporate holder of originally-issued qualified small business stock held more than 5 years may exclude 100% of the gain — capped at the greater of $10M or 10× basis. Any excess gain is taxable.

In a liquidation, this is the cash / FMV received for your stock; the corporation also recognizes §336 gain on the assets sold (a second layer of tax).
1

Your gain

2

Exclusion & taxable

Tax Impact Summary — every transaction

The shareholder and corporation tax result for each transaction, using the numbers entered on each tab. Open a tab to change its inputs; this updates live.

Transaction① Shareholder② Corporation

Formulas & CPA Notes

  • Stock value received = (FMV − mortgage) + cash contributed + FMV of services − boot received. Shares = ⌊stock value ÷ price⌋ (price = par or negotiated); fractional remainder + spread above par → APIC.
  • §351 control test (§368(c)): the property-contributing group must own ≥80% of voting power immediately after. (group’s pre-shares + new shares) ÷ total post-deal. Stock taken purely for services isn’t counted in the property group.
  • Shareholder gain recognized (§351): FMV of boot received + max(0, liabilities assumed − adjusted basis of all assets transferred (NBV + cash)) per §357(c). A loss is never recognized.
  • Shareholder stock basis (§358): cash contributed + (NBV − debt assumed) + FMV of services + gain recognized − boot received, floored at $0 (the §357(c) gain prevents a negative basis).
  • Corporation basis (§362(a)): NBV + gain recognized by the shareholder — equivalently the greater of NBV or the debt assumed when debt is the only boot. Capped at FMV for a net built-in loss (§362(e)(2)).
  • Corporation recognizes no gain or loss (§1032): on transactions in its own stock — (1) formation (issuing stock), (2) reacquisition (repurchasing treasury stock), and (3) resale (reselling treasury stock).
  • Services for stock: not boot, but the FMV is ordinary income to the shareholder (and gives the corporation a deduction / capitalized cost).
  • Depreciation recapture: recapture base = min(recognized gain, accumulated depreciation). §1245 → ordinary rate; §1250 → “unrecaptured §1250 gain,” ≈25%. Remainder is capital gain.
⚠️ Educational model, not tax or legal advice. Confirm appraisal/FMV, the 80% control group, entity type, state tax, exact §1250 vs §1245 split, and securities-law treatment with the engagement CPA and counsel.