property contribution to corporation

[sdtaxman]

Have a client that transferred real estate into the corporation (I know this was bad advise they received from the attorney and never asked me until it was all completed and now cannot be undone.) Anyway, my question is if a 351 election statement needs to be attached to the return showing the transfer of the asset? The real estate had not debt against it. There was no stock received or any other consideration received by them in exchange as they owned the real estate in the same % as the stock of the corporation. I can make the argument both ways and am considering including the statement in the corporation tax return and the shareholder that I do and leaving the shares of stock information blank but just want to get other opinions. thank you.

[Roland Slugg]

... this was bad advise [sic, advice] they received from the attorney.

No kidding! It's not just "bad" advice, but in some jurisdictions it may be considered malpractice by the attorney unless that attorney gets a signed statement from the client acknowledging that he had been advised not to do it.

Regarding your question about a statement to be attached to the return: Yes, one must be attached to both the transferor's return as well as the transfere's return for the year of the exchange. See Regs §1.351-3.