General Provisions

Corp’s basis - $3 + 17 (§357(c) gain)= $20. Since SH is tax-exempt, won’t recognize gain, but corps get high basis. RULE- Disallow step-up basis in this situation. §357(d) Tax Avoidance/ Non=Bonafide Business Purpose §357(b) Situation- Is SH trying to bailout cash/ extract cf avoiding gain … ................
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