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Chapter 8 Pt 2

Chapter 8 Pt 2 - Term Definition What did the 1986 Tax Act...

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Term: What did the 1986 Tax Act eliminate? Definition: The "General Utilities Doctrine", which provided tax-free distributions at the corporate level. The repeal of this doctrine dramatically changed the "planning landscape" post-1986. Term: What does the buyer prefer? Definition: The buyer wants to purchase assets so that they will have a basis of FMV. Also assets are typically appreciated. The buyer gets basis of the stock they buy but it doesn't change the basis of the assets inside the corporation. Term: What does the seller prefer? Definition: The seller wants to sell stock so that they only have to pay on one gain- the difference between the fair market value of the stock and the basis they have in the stock. Only exception is if the seller is a securities dealer, then the stocks are inventory. Term: What happened in the Kimbell-Diamond Milling Case? Definition: KDM purchased 100% of Whaley Mill stock for $210k but Whaley had assets with a basis of $329k.
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Term: What was the issue in the Kimbell-Diamond Milling Case?
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