§ 357. Assumption of liability
(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 or
361 without the recognition of gain if it were the sole consideration, and
(b)
Tax avoidance purpose
(c)
Liabilities in excess of basis
(1)
In general
In the case of an exchange—
(B)
to which section
361 applies by reason of a plan of reorganization within the meaning of section
368
(a)(1)(D) with respect to which stock or securities of the corporation to which the assets are transferred are distributed in a transaction which qualifies under section
355,
if the sum of the amount of the liabilities assumed exceeds the total of the adjusted basis of the property transferred pursuant to such exchange, then such excess shall be considered as a gain from the sale or exchange of a capital asset or of property which is not a capital asset, as the case may be.
(3)
Certain liabilities excluded
(A)
In general
If a taxpayer transfers, in an exchange to which section
351 applies, a liability the payment of which either—
then, for purposes of paragraph (1), the amount of such liability shall be excluded in determining the amount of liabilities assumed.
(d)
Determination of amount of liability assumed
(1)
In general
For purposes of this section, section
358
(d), section
358(h), section
361
(b)(3), section
362(d), section
368
(a)(1)(C), and section
368
(a)(2)(B), except as provided in regulations—
(A)
a recourse liability (or portion thereof) shall be treated as having been assumed if, as determined on the basis of all facts and circumstances, the transferee has agreed to, and is expected to, satisfy such liability (or portion), whether or not the transferor has been relieved of such liability; and
(2)
Exception for nonrecourse liability
The amount of the nonrecourse liability treated as described in paragraph (1)(B) shall be reduced by the lesser of—
(3)
Regulations
The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection and section
362
(d). The Secretary may also prescribe regulations which provide that the manner in which a liability is treated as assumed under this subsection is applied, where appropriate, elsewhere in this title.