Andrew Mitchel LLC

International Tax Blog - New and Interesting International Tax Issues

Free Simplified Section 351 Exchange Flowchart


Today our sister website,, published a free flowchart regarding the requirements for a “tax-free” exchange under Code §351.  The flowchart is a simplified version of the previously published (and also free) Code §351 flowchart.  The simplified version addresses the three primary requirements under Code §351 (transfer of property, in exchange for stock, and control) in an abbreviated manner.

Visit to access the Code §351 exchange flowchart, to view other free tax flowcharts, or to purchase flowcharts.

We also added three new flowcharts (available for purchase) to dealing with the sourcing of income.  The three flowcharts include:

  • Sourcing of inventory sales,
  • Sourcing of non-inventory personal property sales, and
  • Sourcing of other categories of income. 

The inventory sourcing flowchart deals with both manufactured inventory (including the 50/50 method and the independent factory price ["IFP"] method) as well as non-manufactured inventory (including the special rules for inventory sales by foreign persons thru U.S. offices or fixed places of business).

The non-inventory sourcing flowchart includes sourcing of depreciation recapture, the special rules dealing with intangible property sold for contingent consideration, the special sourcing residency rules under Code §865(g), and the special office or fixed place of business rules for residents and nonresidents.

The “other” sourcing flowchart deals with the other categories of income, such as interest income, dividend income, personal services, rentals and royalties, disposition of real property, insurance underwriting, social security benefits, guarantee fees, scholarships, prizes and awards, transportation income, international communications income, space and ocean income, notional principal contracts, and analogy.

Because the sourcing rules can be quite detailed, a “simplified” version of each flowchart is included.  These sourcing flowcharts are available for purchase at

Tags: 351 Exchanges, 861 Source of Income, Charts - Flowcharts