Opinion ID: 782888
Heading Depth: 4
Heading Rank: 1

Heading: Transfer of real estate partnership interests to Cashmere

Text: 111 Cashmere Investment Associates, Inc. (Cashmere) was an inactive shelf corporation incorporated in Delaware in 1982 and controlled by Kanter. On or about May 15, 1983, Kanter directed the grantor trusts to transfer their real estate partnership interests to Cashmere in what was intended as a nontaxable exchange under 26 U.S.C. § 351 in return for Cashmere common and preferred stock. Concurrently with the § 351 transfer, the grantor trusts also transferred to Cashmere eight promissory notes payable to, and held by, the grantor trusts with a face value, in total, of $498,500. The promissory notes were all dated May 1, 1983, and were payable on August 1, 1983. These promissory notes, according to Kanter, had a basis equal to face value and increased the total aggregate basis of the transferred property so as to eliminate the gain that would otherwise have been realized under 26 U.S.C. § 357(c) through the assumption by Cashmere of the negative capital accounts in the transfer of the real estate partnership interests. See 26 U.S.C. § 357(c). 28