chp7.summary.table.12

chp7.summary.table.12 - SEC 301: DIV to extent of...

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Tax 3011 Chp 7 Summary Table Sections 302(b)(1), (2), and (3); Redemption Section 302(b)(4); Partial Liquidation Code requirements SALE if Noncorporate S/H Only; SALE if 1) NOT essentially equivalent to a dividend (s/h level); if can’t satisfy a safe harbor test, this is a last resort via IRS or court 1) Not essentially equivalent to a dividend (corporate contraction) 2) Substantially disproportionate: post- redemption percentage ownership less than a) 50 percent overall; and b) 80 percent of pre-redemption ownership 2) Attributable to termination of a qualified business a) Business (not an investment) b) Conducted 5 years pre-redemption c) Not acquired in a taxable transaction in 5 years pre-redemption 3) Complete termination of interest: family attribution waived if prohibited interest not acquired for 10 years OTHERWISE: Sec. 301 Distribution OTHERWISE: Sec. 301 Distribution Effect on S/H SALE: Gain/loss realized = (FMV – liabs) - AB SALE: Gain/loss realized = (FMV – liabs) - AB SEC 301:
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Unformatted text preview: SEC 301: DIV to extent of E&P S/Hs AB in Remaining Stock SALE: PER SHARE AB is Unchanged; this is a contraction in ownership; TOTAL AB (#shs * same per/sh AB) SALE: PER SHARE AB is Unchanged SEC 301: PER SHARE increase by AB of stock surrendered; this is equivalent to a dividend; TOTAL AB SAME (#shs * per/sh AB) SEC 301: PER SHARE increase by AB of stock surrendered S/Hs AB in Property Recd SALE: FMV SALE: FMV SEC 301: FMV SEC 301: FMV Effect on Distributing Corps Taxable Income GAIN: Recognized LOSS: NOT recognized GAIN: Recognized LOSS: NOT recognized Effect on Distributing Corps E&P SALE: Reduce E&P by redeemed stocks share of E&P not > amount distributed SALE: Reduce E&P by redeemed stocks share of E&P not > amount distributed SEC 301: Reduce E&P by cash distribution; (GREATER FMV or AB of property) less liabilities SEC 301: Reduce E&P by cash distribution; (GREATER FMV or AB of property) less liabilities...
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