- 7 - the Capital Note would be classified as a "nonadmitted asset because it was unsecured;" thus, it would not be treated as an asset of NALICO for purposes of computing its capital-to-premium ratio as of December 31, 1989. The parties agree that the transactions under scrutiny qualify under the nonrecognition provision of section 351, except as that section may be limited by section 357(a) and (c)(1). They also agree that section 357(b) is not applicable, but disagree as to the application of sections 357(a) and 357(c)(1). SEC. 357(a) provides: (a) General Rule.--Except as provided in subsections (b) and (c), if-- (1) the taxpayer receives property which would be permitted to be received under section 351, 361, 371, or 374, without the recognition of gain if it were the sole consideration, and (2) as part of the consideration, another party to the exchange assumes a liability of the taxpayer, or acquires from the taxpayer property subject to a liability, then such assumption or acquisition shall not be treated as money or other property, and shall not prevent the exchange from being within the provisions of section 351, 361, 371, or 374, as the case may be. Section 357(c)(1) provides: (1) In General.--In the case of an exchange-- (A) to which section 351 applies, orPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011