One of the important objectives in the incorporation of a farm or ranch business is to accomplish a tax-free exchange of assets to the new entity. With a low income tax basis for many of the assets in most farm and ranch businesses, the consequences of a taxable exchange can be very serious in terms of income tax liability on the gain involved.
Harl, Neil E.
"Debt in Excess of Basis,"
Agricultural Law Digest: Vol. 12
, Article 1.
Available at: http://lib.dr.iastate.edu/aglawdigest/vol12/iss14/1