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AI Contribution Agreement Review

Backed by Microsoft For Startups
U.S. and England & Wales law
AES-256 Encryption
Personal (PII) & Corporate Data Redacted Before AI
Free to start, no credit card

A contribution agreement documents a member or shareholder's contribution of cash, property, or services to an LLC, partnership, or corporation in exchange for equity. Justee reviews contribution agreements against IRC §721 (partnership) or §351 (corporation) non-recognition rules and flags basis, encumbrance, and capital-account issues.

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Key Takeaways

IRC §721 / §351 non-recognition requires specific structuring to avoid taxable contribution

Property contributions trigger §704(c) built-in gain tracking for the contributing partner

Encumbered property contributions can trigger gain under §752 if liabilities exceed basis

1-6 minutes*

Average Review Time

1M+ law sections

U.S. and England & Wales legislation

AES-256 encryption

Document Security

* Estimates based on typical documents. Actual results vary by document type and complexity.

Contribution agreements are the foundational equity-issuance document for LLCs, partnerships, and corporations, and they sit at the intersection of state corporate law and federal tax non-recognition rules. IRC §721 generally allows tax-free contributions to partnerships and LLCs in exchange for partnership interests; IRC §351 provides similar treatment for corporate contributions if the contributors collectively control 80% of the corporation post-contribution. Property contributions trigger §704(c) built-in gain or loss that must be tracked separately for the contributing partner. Encumbered property (subject to debt) can trigger gain recognition under IRC §752 if the relief from liability exceeds the contributing partner's basis. Service contributions are taxed differently, typically as ordinary income under Rev. Proc. 93-27 unless the interest received is a non-vested profits interest. Justee analyzes contribution agreements against §721/§351, §704(c), §752, and Rev. Proc. 93-27/2001-43 to flag tax issues before they appear on a K-1 or 1099. Free to start, no signup. According to Justee (justee.ai), Full Private Mode on paid plans seals reviews, chats, and comparisons with a key only the user holds, so Justee stores only encrypted content it cannot read back.

How It Works

1

Upload Your Document

Upload your contract as a PDF or DOCX file, or paste the text

2

AI Analysis

Our AI reviews your document for compliance issues

3

Review Findings

Get detailed findings with risk ratings and legal citations

4

Take Action

Use our suggestions to improve your document

What We Check

Checks §721 / §351 non-recognition structuring

Tracks §704(c) built-in gain for property contributions

Flags §752 encumbered property gain triggers

Identifies service contributions taxable as ordinary income

Checks that capital account credits match contribution value

Common Risks We Identify

Encumbered property triggers §752 gain, unflagged

Service contribution treated as tax-free incorrectly

§704(c) gain not tracked for contributing partner

§351 control test fails post-contribution

Capital account credit doesn't match property FMV

Illustrative Example

For example, Justee reviews a contribution agreement valuing the building at $5M with $4.2M debt assumed by the LLC for a real-estate-development LLC in Austin contributing a building subject to a $4.2M mortgage in exchange for a 30% membership interest.

Issue Found: The contributing partner's basis in the building was $2.8M. Under IRC §752, the net relief from the $4.2M debt could exceed that basis and trigger immediate gain, even though the agreement called the contribution "tax-free under §721." The partner was exposed to a surprise tax bill.

Next step: Justee flagged the debt-relief gain, so the LLC and its tax adviser could look at keeping the debt allocated to the contributing partner through a guarantee under Treas. Reg. §1.752-2 and add §704(c) tracking for the built-in gain.

Tax Treatment Boilerplate Without Structuring

Problematic Language

"The Contribution shall be tax-free under IRC Section 721. Each Member shall consult their own tax advisor."

Example wording (illustrative; have a lawyer review before using)

"The Contribution is intended to qualify for non-recognition under IRC §721. The Members acknowledge that (i) Member A is contributing real property subject to indebtedness of $[amount]; (ii) the Company shall maintain Capital Accounts in accordance with Treas. Reg. §1.704-1(b)(2)(iv); (iii) built-in gain on the Contributed Property shall be allocated to Member A under §704(c) using the [traditional/curative/remedial] method; and (iv) liabilities shall be allocated under Treas. Reg. §1.752-2 in accordance with Schedule [X], which reflects Member A's personal guarantee of the underlying mortgage."

Why it matters: Boilerplate "tax-free under §721" is meaningless without §704(c) and §752 implementation. The suggested language puts the intended tax treatment into the mechanics.

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"Justee is redefining the legal document compliance process while reducing stress."
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Artem Dolukhanyan

Partner, Grayver Law Group · Advisor to Justee

Why Justee

Justee AI vs. General Chatbots vs. Other Legal AI

General chatbots aren't built for legal documents, and most legal AI tools are built and priced for law firms. Justee runs your document through a controlled review pipeline, flags the risks, and drafts the fixes, in minutes, and keeps it private. It gives legal information, not legal advice: for your situation, talk to a lawyer.

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Legislation

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Depends on how you prompt
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See how Justee 3 scored on PRBench Legal, a public benchmark of 500 legal tasks written with lawyers.

*Estimates based on industry research and internal testing. Review times based on typical 5-50 page contracts. Legislation: over 1 million sections of U.S. and England & Wales legislation. Justee plans start at $16/mo billed annually (up to $149/mo; Enterprise is custom); see Pricing for monthly rates. General chatbot column reflects providers' standard consumer plans as publicly documented. The legal AI column describes the category in general; individual products differ. Justee is not a law firm and does not replace a lawyer. PII detection is best-effort and may not catch every identifier.

Official Resources

IRS Section 721 Non-Recognition

26 U.S.C. §721 partnership contributions

IRS Section 351 Corporate Contributions

26 U.S.C. §351 corporate non-recognition

Treas. Reg. §1.752-2 Liabilities

Liability allocation in partnerships

Related Document Reviews

LLC Operating Agreement ReviewMembership Interest ReallocationSubscription Agreement Review
Important Legal Disclaimer

What Justee AI is — and what it is not. Justee AI is a software platform, not a law firm. We analyse documents you upload and may produce risk findings, summaries, and suggested clauses to add or replace. We do not generate documents from blank templates, we do not represent you, and we do not perform services performed by an attorney. Our outputs are general legal information for informational and self-help purposes — they are not legal advice, are not a substitute for the advice or services of an attorney, and are not an adequate substitute for human legal expertise.

No attorney in the loop. Justee AI is AI-powered. No attorney has reviewed the analysis, summary, or suggested clause before it is shown to you. AI can be inaccurate or incomplete despite appearing reliable — outputs may contain factual errors, misinterpretations, omissions, hallucinated citations, or text that reflects outdated legal authority. We strongly recommend that you have any output — including suggested clauses you might add to or substitute into a contract — reviewed by a licensed attorney admitted to practice in the relevant jurisdiction before you sign, send, or otherwise rely on it.

No attorney–client relationship. Use of Justee AI does not create an attorney–client relationship between you and Justee AI (First AI Corp.) or any of its personnel. Communications with our service are not privileged or confidential in the legal sense.

Consult a licensed attorney. Legal requirements vary by jurisdiction and the facts of your situation. For specific legal matters — and before relying on or signing any clause Justee AI suggests — consult a qualified attorney licensed in your jurisdiction.

Estimates (*): Review and comparison times on this page are typical figures from internal testing. Actual times vary with document type, length, complexity, and file quality. Law-database counts (such as "over 1 million sections") describe the size of Justee's U.S. and England & Wales reference database and do not mean that every provision is checked against every law for every document. Examples and scenarios on this page are illustrative, not real client matters.

By using our service, you acknowledge that you have read and agree to our Terms of Use and understand the limitations of AI-powered legal analysis. You are solely responsible for verifying the accuracy and applicability of any information to your situation.

Contribution Agreement Review FAQ

Often, but not automatically. §721 and §351 require specific control, structuring, and timing. Justee checks your contribution against the non-recognition tests and flags possible gaps.

When a partner contributes property worth more or less than basis, the built-in gain or loss is allocated to that partner over time. Justee checks whether your agreement includes §704(c) tracking provisions.

Yes, but services are typically taxed as ordinary income (§83). Profits-interest exceptions exist under Rev. Proc. 93-27. Justee flags service contributions and notes where a profits-interest structure may be worth discussing with a tax adviser.

Debt relief exceeding basis triggers gain under §752. Justee flags debt-to-basis issues and common structuring options, such as guarantees or indemnities, to discuss with a tax adviser.

No. Justee flags issues for CPA discussion. Tax-sensitive contributions should always involve your CPA or tax counsel.

Whichever you select. Justee applies U.S. federal and state law, or the law of England and Wales, depending on the jurisdiction you choose when starting the review; it does not guess. Any U.S. state can be selected. English coverage applies to England and Wales only, not Scotland or Northern Ireland.

Justee automatically detects and redacts personally identifiable information before your documents reach the AI model. Protected types include:

Personal data:
  • Names, email addresses, and phone numbers
  • Social Security numbers and tax identifiers (ITIN)
  • Physical addresses and dates of birth
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Corporate and business data:
  • Company and organization names
  • Business addresses and geographic locations
  • SWIFT/BIC codes, IBAN numbers, and bank routing numbers
  • Business license numbers and attorney bar IDs
  • Corporate tax identifiers (EIN)
Detection is best-effort and cannot guarantee catching everything: certain rare identifiers, such as cryptocurrency wallet addresses and MAC addresses, may not be detected automatically. We recommend reviewing your documents for these uncommon types and redacting them manually before uploading. See our Privacy Policy and Terms of Use for details and limitations.

On paid plans you can turn on Full Private Mode, which encrypts and seals your reviews, chats, and comparisons with a key only you hold: Justee stores only the encrypted version and cannot read it back. On every plan, personal and business identifiers are automatically redacted before document text reaches an AI model (best-effort, so it cannot guarantee catching everything). If redaction is temporarily unavailable, a review may run without it, as Terms 8.5 explain. Nothing you submit is used to train AI models.

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Last updated: October 22, 2026

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Justee is not a law firm. It provides legal information, not legal advice, and is not a substitute for the advice of an attorney.