Create an argument for allowing loss on a sales transaction

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"Transfers to Controlled Corporations and Related Party Losses" Based on the lecture, address the following:

• Create a scenario where the transfer of property to a controlled corporation under Section 351 of the Internal Revenue Code (IRC) results in the taxation to the transferor. Evaluate the fairness of the taxation of the transaction to the transferor. Provide a tax-planning strategy to prevent taxation of similar transfers.

• Section 267 of the IRC disallows a deduction on losses realized on the sale of property and a deduction for accrued expenses between a corporation and a controlling shareholder. Generally Accepted Accounting Principles (GAAP) does not include this disallowance provision. Create an argument for allowing a loss on a sales transaction between a controlled corporation and shareholder when the transaction includes an independent appraisal and the loss is similar to losses incurred in arm's length transactions. Provide an example of allowing such loss to support your argument.

Please NO COPY AND PASTE, CITE sources where you retrieved information from.

Reference no: EM131240263

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