Index To Tax Research File-Acc 565

Index To Tax Research File-Acc 565 - Index to Tax Research...

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Index to Tax Research File Item Page Reference Determine the Facts 2 Identify the Issues 2 Locate Applicable Authorities 2 Evaluate Authorities 2-7 Analyze the Facts to Terms of applicable Authorities 8 Communicate Conclusion and Recommendations to Others 9 Memorandum to File 9-10 Client Letter 11-12 Determine the Facts Parent Corporation has owned 60% of Subsidiary Corporation’s single class of stock for a number of years. Tyrone owns the remaining 40% of the Subsidiary stock. On August 10, of the current year, Parent purchases Tyrone’s Subsidiary stock for cash. On September 15, Subsidiary adopts a plan of liquidation. Subsidiary then makes a single liquidating distribution on October 1. The activities of Subsidiary are to continue as a separate division of Parent.
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Identify the Issues The issue is does the liquidation of Subsidiary qualify for nonrecognition treatment under Secs 332 and 337? Locate the Applicable Authorities IRC: 332 (b), 1504 (a) Rev Rul 70-106, 1970-1 CB 70 Rev Rul 75-521, 1975-2 CB 120 Evaluate Authorities Two recent revenue rulings offer additional guidance on the level of stock. We do not have to look any further than the IRC and Rev Rul; we can have confidence in our tax assessment. Sec. 332. Complete liquidations of subsidiaries a) General rule No gain or loss shall be recognized on the receipt by a corporation of property distributed in complete liquidation of another corporation. (b) Liquidations to which section applies For purposes of this section, a distribution shall be considered to be in complete liquidation only if - (1) the corporation receiving such property was, on the date of the adoption of the plan of liquidation, and has continued to be at all times until the receipt of the property, the owner of stock (in such other corporation) meeting the requirements of section 1504(a) (2); and either (2) the distribution is by such other corporation in complete cancellation or redemption of all its stock, and the transfer of all the property occurs within the taxable year; in such case the adoption by the shareholders of the resolution under which is authorized the distribution of all the assets of such corporation in complete cancellation or redemption of all its stock shall be considered an adoption of a plan of liquidation, even though no time for the completion of the transfer of the property is specified in such resolution; or (3) such distribution is one of a series of distributions by such other corporation in complete cancellation or redemption of all its stock in accordance with a plan of liquidation under which the transfer of all the property under the liquidation is to be completed within 3 years from the close of the taxable year during which is made the first of the series of distributions under the plan, except that if such transfer is not completed within such period, or if the taxpayer does not continue qualified under paragraph (1) until the completion of such transfer, no distribution
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Index To Tax Research File-Acc 565 - Index to Tax Research...

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