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chp8.summary.table.12 - receivable(I/R then distributes the...

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Tax 3011 Chapter 8 Summary Table Section 331: General Liquidation Section 332: Subsidiary Liquidation Shareholders surrender all stock in exchange for property and liquidating corporation ceases to exist Parent recognizes no gain OR loss and can elect purchase or carryover basis if 1) 80% control 2) Plan of liquidation 3) Distribution within one taxable year or three years after close of year plan adopted Effect on S/H SALE: Gain/loss realized = (FMV – liabilities) - AB EXCEPTION: Gain reported on installment obligation as payments received (i.e., arises when the corp sells asset(s) and accepts an installment
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Unformatted text preview: receivable (I/R), then distributes the I/R (note) to the shareholder) SALE: Gain/loss realized = Parent recognizes NO gain OR loss S/H’s AB in Property Rec’d FMV Carryover basis Effect on Distributing Corp’s Taxable Income Gains AND losses recognized EXCEPTION: Related-party losses disallowed per Sec. 336(d)(1); tax-avoidance losses limited per Sec. 336(d) (2) NO gain OR loss recognized Effect on Distributing Corp’s E&P and Tax Attributes E&P eliminated; other tax attributes disappear No E&P effect since carryover basis AND parent inherits subsidiary’s attributes...
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