82d1ef037aa05a89a1a0fad8192987e45a3637f5.doc Gain or loss to shareholders--corporate liquidations Letter Ruling 200210035, December 6, 2001 [Code Sec. 331 ] We respond to your June 19, 2001 request for rulings regarding certain federal income tax consequences of a proposed transaction. SUMMARY OF FACTS X is an S corporation that, until Date 2, con-ducted Businesses A, B, and C. Business C was partly conducted by Sub, a wholly owned subsidiary that was a qualified Subchapter S subsidiary (QSub) under §1361(b)(3)(B) of the Internal Revenue Code. On Date 1, the Board of Directors of X adopted a plan of complete liquidation, which was approved by the shareholders of X on Date 2. During the period after Date 2, X disposed of the assets of Businesses A, B, and C, including the stock of Sub, in transactions treated for tax purposes as asset sales. Businesses A and C and one part of Business B were sold for cash. The other part of Business B was sold to corporation Z for cash and the stock of Z that constituted m percent of the total stock of Z. X distributed the stock of Z to its
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Taxation in the United States, Income tax in the United States