Final Regs Clarify No Basis Reduction for Certain Liabilities in Intragroup Section 351 Transfers

October 16, 2026

This document finalizes regulations that prevent a transferee member’s assumption of certain liabilities from reducing the transferor member’s basis in the transferee’s stock in intragroup section 351 exchanges. It adopts the approach first proposed in 2001, withdrawn in 2023, and reproposed in 2024. No comments were received.

Sources

• Federal Register Documents (October 16, 2026): https://www.federalregister.gov/documents/2026/10/16/2026-21253/non-applicability-of-section-357c-to-consolidated-groups